Peapack-Gladstone Financial Corporation Reports Second Quarter Results

BEDMINSTER, NJ - (NewMediaWire) - July 25, 2023 - Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its second quarter 2023 results.

This earnings release should be read in conjunction with the Company’s Q2 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 $57.5 million, net income of $13.1 million and diluted earnings per share (“EPS”) of $0.73 for the quarter ended June 30, 2023, compared to revenue of $61.4 million, net income of $20.1 million and diluted EPS of $1.08 for the three months ended June 30, 2022.

The Company’s return on average assets was 0.82%, return on average equity was 9.43%, and return on average tangible equity was 10.30%, each for the quarter ended June 30, 2023. Loans grew by $70 million to $5.4 billion while deposits declined by $110 million to $5.2 billion during the second quarter. Deposits have declined minimally on a year-to-date basis by $7 million.

The Company’s liquidity position remains strong as balance sheet liquidity (investments available for sale, interest-earning deposits and cash) was $761 million as of June 30, 2023 which is 11.74% of total assets.  The Company also has $2.8 billion of external borrowing capacity, when combined with balance sheet liquidity provides us with 283% coverage of our uninsured deposits. Approximately 76% of our deposits are presently covered by FDIC insurance or are fully collateralized.

Douglas L. Kennedy, President and CEO said, “Our second quarter results were disappointing, but reflect the challenging nature of the current interest rate environment and the persistent inversion of the treasury yield curve. These conditions have resulted in compression of our net interest margin for a second consecutive quarter and a reduction in net interest income. The margin compression was primarily driven by an increase in our cost of funds during the first six months of 2023, as wealth and commercial clients moved funds from noninterest-bearing accounts to higher-yielding deposit products and other alternative investments. During these difficult times we are fortunate to be able to rely on a stable stream of wealth-related and other noninterest income, which  represented 32% of revenue during the second quarter."

The Company recently announced its plan to expand into New York City. An application has been filed with regulatory agencies to open a location in mid-town Manhattan. The Company has hired and continues to actively recruit from the tri-state area to build a team of experienced financial service professionals to gain entry into this lucrative market.

Mr. Kennedy noted, “With the recent changes to the New York City banking landscape and the void left by the failure of larger, niche financial institutions, we believe the current environment has created an unprecedented opportunity to introduce our brand of private banking to this market. We have the right client-centric culture to take advantage of this rare sequence of events and seize this opportunity.  We recently announced that Jeanne Scungio has joined our team as the Market President of New York City.  Jeanne has spent the past 20 years as a Senior Leader at First Republic Bank.  Under her leadership we expect to build a formidable presence in Manhattan."

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

Peapack Private Wealth Management:

 

·       AUM/AUA in our Peapack Private Wealth Management Division totaled $10.7 billion at June 30, 2023, an increase of 4% (14% annualized) over March 31, 2023.

·       Gross new business inflows for Q2 2023 totaled $274 million ($214 million managed). For the first six months of 2023, gross business inflows totaled $528 million ($451 million managed). Managed gross inflows are on a record annualized pace for our Company.

·       Wealth Management fee income of $14.3 million for Q2 2023 comprised 25% of total revenue for the quarter.

 

Commercial Banking and Balance Sheet Management:

 

·       The net interest margin ("NIM") was 2.49% in Q2 2023, a decline of 39 basis points compared to Q1 2023 and a decline of 34 basis points when compared to Q2 2022.

·       Total deposits declined $7 million to $5.2 billion from December 31, 2022.

·       Noninterest-bearing demand deposits have declined by $222 million since December 31, 2022, but still comprised 20% of total deposits as of June 30, 2023.

·       Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 91% of total deposits at June 30, 2023.

·       Total loans were $5.4 billion at June 30, 2023 reflecting growth of $148 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 June 30, 2023.

·       Fee income on unused commercial lines of credit totaled $809,000 for Q2 2023.

 

Capital Management:

 

·       During the quarter, the Company repurchased 184,000 shares of Company stock for a total cost of $4.7 million. The Company repurchased 930,977 shares of stock for a total cost of $32.7 million during the year ended December 31, 2022.

·       At June 30, 2023, the Regulatory Tier 1 Leverage Ratio stood at 10.80% for Peapack-Gladstone Bank (the "Bank") and 9.06% for the Company. The Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.68% for the Bank and 11.47% for the Company. These ratios are significantly above well capitalized standards, as capital has benefitted from strong net income generation.

 

Non-Core Items:

 

The June 2023 quarter included the following items, which management believes are non-core items:

 

·       $209,000 negative fair value adjustment on an equity security held for CRA investment.

·       $1.7 million of expense associated with the recent retirement of certain employees.

·       $318,000 of an income tax benefit for a tax reversal.

·       These items decreased total revenue by $209,000, reduced net income by $1.5 million and EPS by $0.08 for the June 2023 quarter.

 

SUMMARY INCOME STATEMENT DETAILS:

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

June 2023 Year Compared to Prior Year

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

June 30,

 

 

 

Increase/

 

(Dollars in millions, except per share data)

 

2023

 

 

2022

 

 

 

(Decrease)

 

Net interest income

 

$

82.90

 

 

$

82.51

 

 

 

$

0.39

 

 

 

0

%

Wealth management fee income

 

 

28.01

 

 

 

28.72

 

 

 

 

(0.71

)

 

 

(2

)

Capital markets activity (A)

 

 

1.83

 

 

 

7.51

 

 

 

 

(5.68

)

 

 

(76

)

Other income (B)

 

 

6.80

 

 

 

(3.01

)

 

 

 

9.81

 

 

N/A

 

Total other income

 

 

36.64

 

 

 

33.22

 

 

 

 

3.42

 

 

 

10

 

Operating expenses (C)

 

 

73.27

 

 

 

66.83

 

 

 

 

6.44

 

 

 

10

 

Pretax income before provision for credit losses

 

 

46.27

 

 

 

48.90

 

 

 

 

(2.63

)

 

 

(5

)

Provision for credit losses

 

 

3.21

 

 

 

3.82

 

 

 

 

(0.61

)

 

 

(16

)

Pretax income

 

 

43.06

 

 

 

45.08

 

 

 

 

(2.02

)

 

 

(4

)

Income tax expense (D)

 

 

11.56

 

 

 

11.54

 

 

 

 

0.02

 

 

 

0

 

Net income

 

$

31.50

 

 

$

33.54

 

 

 

$

(2.04

)

 

 

(6

)%

Diluted EPS

 

$

1.74

 

 

$

1.79

 

 

 

$

(0.05

)

 

 

(3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (E)

 

$

119.54

 

 

$

115.73

 

 

 

$

3.81

 

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.99

%

 

 

1.09

%

 

 

 

(0.10

)

 

 

 

Return on average equity

 

 

11.44

%

 

 

12.59

%

 

 

 

(1.15

)

 

 

 


(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 six months ended June 30, 2022 included a $6.6 million loss on sale of securities. and a fair value adjustment on a CRA equity security of negative $1.2 million. 

(C) The six months ended June 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 six months ended June 30, 2022 included $1.5 million of severance expense related to certain staff reorganizations.

(D) Income tax expense for the six 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.

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


June 2023 Quarter Compared to Prior Year Quarter

 

 

Three Months Ended

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

June 30,

 

 

 

June 30,

 

 

Increase/

 

(Dollars in millions, except per share data)

 

2023

 

 

 

2022

 

 

(Decrease)

 

Net interest income

 

$

38.92

 

 

 

$

42.89

 

 

$

(3.97

)

 

 

(9

)%

Wealth management fee income

 

 

14.25

 

 

 

 

13.89

 

 

 

0.36

 

 

 

3

 

Capital markets activity (A)

 

 

0.87

 

 

 

 

2.86

 

 

 

(1.99

)

 

 

(70

)

Other income (B)

 

 

3.46

 

 

 

 

1.76

 

 

 

1.70

 

 

 

97

 

Total other income

 

 

18.58

 

 

 

 

18.51

 

 

 

0.07

 

 

 

0

 

Operating expenses (C)

 

 

37.69

 

 

 

 

32.66

 

 

 

5.03

 

 

 

15

 

Pretax income before provision for credit losses

 

 

19.81

 

 

 

 

28.74

 

 

 

(8.93

)

 

 

(31

)

Provision for credit losses

 

 

1.70

 

 

 

 

1.45

 

 

 

0.25

 

 

 

17

 

Pretax income

 

 

18.11

 

 

 

 

27.29

 

 

 

(9.18

)

 

 

(34

)

Income tax expense (D)

 

 

4.96

 

 

 

 

7.19

 

 

 

(2.23

)

 

 

(31

)

Net income

 

$

13.15

 

 

 

$

20.10

 

 

$

(6.95

)

 

 

(35

)%

Diluted EPS

 

$

0.73

 

 

 

$

1.08

 

 

$

(0.35

)

 

 

(32

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (E)

 

$

57.50

 

 

 

$

61.40

 

 

$

(3.90

)

 

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets annualized

 

 

0.82

%

 

 

 

1.30

%

 

 

(0.48

)

 

 

 

Return on average equity annualized

 

 

9.43

%

 

 

 

15.43

%

 

 

(6.00

)

 

 

 


(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 June 2023 and 2022 quarters included a fair value adjustment on a CRA equity security of negative $209,000 and negative $475,000, respectively. 

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

(D) Income tax expense for quarter 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.

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


(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) The June 2023 quarter included one-time charges of $1.7 million associated with the recent retirement of certain employees while the March 2023 quarter included $300,000 of expense related to accelerated vesting of restricted stock related to one executive and $175,000 of expense associated with three retail branch closures.

(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.

(D) Total revenue equals the sum of net interest income plus total other income.

SUPPLEMENTAL QUARTERLY DETAILS:

 

Peapack Private Wealth Management

AUM/AUA in the Bank’s Peapack Private Wealth Management (“PPWM”) Division increased to $10.7 billion at June 30, 2023.  For the June 2023 quarter, PPWM generated $14.3 million in fee income, compared to $13.8 million for the March 31, 2023 quarter and $13.9 million for the June 2022 quarter. The equity market generally improved during Q2 2023, contributing to the growth in AUM/AUA.

 

John Babcock, President of Peapack Private Wealth Management noted, “In Q2 2023, total new accounts and client additions amounted to $274 million ($214 million managed), and net flows were positive. As we look ahead in 2023, 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 PPWM in our market and continues to drive our growth and success.” 

Loans / Commercial Banking

Total loans grew $148 million or 3% (6% annualized) to $5.4 billion at June 30, 2023 when compared to $5.3 billion at December 31, 2022.

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

Mr. Kennedy noted, “Our loan growth has historically been strong, however, given economic uncertainty and rising interest rates, we believe loan demand will subside somewhat compared to recent prior years. We began tightening our underwriting in anticipation of a potential economic downturn in early 2022 and have continued this practice in 2023. 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, and Corporate Advisory and SBA businesses. Additionally, we are encouraged by the expansion into the Life Insurance Premium Finance business and believe it will prove to be a safe and profitable business line that aligns with the Company's overall strategy.”

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

The Company’s NII of $38.9 million and NIM of 2.49% for Q2 2023 decreased $5.1 million and 39 basis points from NII of $44.0 million and NIM of 2.88%, for the linked quarter (Q1 2023) and decreased $4.0 million and 34 basis points from NII of $42.9 million and NIM of 2.83% for the prior year quarter (Q2 2022).  When comparing Q2 2023 to the linked and prior year quarter the Company has seen a rapid increase in interest expense mostly driven by higher deposit rates during 2023. Cycle to date betas are approximately 41%, which is consistent with results across the financial services industry.  The intense competition for deposit balances was the primary driver for increased costs.

Funding / Liquidity / Interest Rate Risk Management

Total deposits decreased $6.7 million to $5.2 billion at June 30, 2023.  The Company saw limited net deposit outflows during first half of 2023 with most outflow activity related to larger deposit relationships utilizing their funds for normal business purposes such as deployment of excess liquidity into the equity or treasury markets, asset acquisitions or further investments into their businesses, and tax payments. The Company has also seen clients transitioning money into interest-bearing deposit accounts from noninterest-bearing deposit accounts as a result of the rapid increases in the Fed Funds rate.

Mr. Kennedy noted, "Although we did see minimal outflows associated with clients concerned about deposit insurance, our team actively engaged with many of our deposit customers during the first half of 2023 to discuss any concerns and provide assurance regarding the safety and soundness of our institution.  Additionally, we migrated $344 million of uninsured deposits this year into fully-insured FDIC products for those customers that desired that type of protection." 

Mr. Kennedy also noted, “91% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 20% of our total deposits. 85% of deposits are held by clients with relationships greater than three years old and 66% of deposits are held by clients with relationships greater than five years old. These metrics reflect the core nature of the majority of our deposit base.”

At June 30, 2023, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $761 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 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. 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 283% of the total uninsured deposits on the Company's balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $868,000 for the June 2023 quarter compared to $966,000 for the March 2023 quarter and $2.9 million for the June 2022 quarter.

Three Months Ended

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

(Dollars in thousands, except per share data)

 

2023

 

 

2023

 

 

2022

 

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

 

$

15

 

 

$

21

 

 

$

151

 

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

 

 

 

 

 

 

 

 

 

Gain on sale of SBA loans

 

 

838

 

 

 

865

 

 

 

2,675

 

Corporate advisory fee income

 

 

15

 

 

 

80

 

 

 

33

 

Total capital markets activity

 

$

868

 

 

$

966

 

 

$

2,859

 


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

Other noninterest income was $3.5 million for Q2 2023 compared to $3.3 million for Q1 2023 and $1.8 million for Q2 2022. Q2 2023 included $809,000 of unused line fees compared to $852,000 for Q1 2023 and $529,000 for Q2 2022. Additionally, Q2 2023 included $221,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees while Q1 2023 included $145,000. The gain on sale of SBA loans for the first and second quarters of 2023 have been impacted by market volatility resulting in lower sale premiums and origination volumes.

Operating Expenses

The Company’s total operating expenses were $37.7 million for the second quarter of 2023, compared to $35.6 million for the March 2023 quarter and $32.7 million for the June 2022 quarter. The June 2023 quarter included $1.7 million of expense associated with the recent retirement of certain employees. The March 2023 quarter included $300,000 of restricted stock expense associated with an executive retiring and $175,000 of expense associated with the closure of three retail branch locations.  The June 2023 quarter also included increases associated with compensation related to the addition of full-time equivalent employees, which grew to 520 at June 30, 2023 compared to 512 at March 31, 2023 and 472 at June 30, 2022, as well as normal annual merit increases.

Mr. Kennedy noted, “The Company is committed to be in a position of strength when industry headwinds recede as evident by the recent announcement of its intention 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 will also 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 enhancements to further enhance the client experience.”

Income Taxes

 

The effective tax rate for the three months ended June 30, 2023 was 27.4%, as compared to 26.4% for the March 2023 quarter and 26.4% for the quarter ended June 30, 2022.  The June 30, 2023 quarter benefitted from a $318,000 reversal of a previously recorded New Jersey surtax. The March 31, 2023 quarter 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 modified loans that are performing in accordance with their terms) were $34.5 million, or 0.53% of total assets at June 30, 2023, as compared to $28.8 million, or 0.44% of total assets at March 31, 2023. The increase during the second quarter was primarily due to one multifamily relationship totaling $7.6 million that transferred to a nonaccrual status during the quarter.  Loans past due 30 to 89 days and still accruing were $14.5 million, or 0.27% of total loans.

Criticized and classified loans totaled $112.3 million at June 30, 2023, reflecting an increase from March 31, 2023 and a decline from June 30, 2022 levels. The Company currently has no loans or leases on deferral and accruing.  

For the quarter ended June 30, 2023, the Company’s provision for credit losses was $1.7 million compared to $1.5 million for the March 2023 quarter and $646,000 for the June 2022 quarter. The provision for credit losses in the June 2023 quarter was driven by loan growth, in addition to Allowance for Credit Losses ("ACL") to individually evaluated loans related to one loan totaling $7.6 million that was transferred to nonaccrual status. 

At June 30, 2023, the allowance for credit losses was $62.7 million (1.15% of total loans), compared to $62.3 million (1.16% of loans) at March 31, 2023, and $59.0 million (1.14% of loans) at June 30, 2022.

Capital

The Company’s capital position during the June 2023 quarter increased as a result of net income of $13.1 million, which was partially offset by the repurchase of 184,000 shares of common stock through the Company’s stock repurchase program at a total cost of $4.7 million and the quarterly cash dividend of $890,000. Additionally, during the second quarter of 2023 the Company recorded a net loss in accumulated other comprehensive income of $522,000 ($3.8 million loss related to the available for sale portfolio partially offset by a $3.2 million gain on cash flow hedges) increasing the total accumulated other comprehensive loss amount to $68.0 million as of June 30, 2023 ($76.0 million loss related to the available for sale portfolio partially offset by a $8.0 million gain on the cash flow hedges). 

Tangible book value per share improved during Q2 2023 to $28.98 at June 30, 2023 from $28.20 at March 31, 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 June 30, 2023 remain strong, and generally reflect increases from March 31, 2023 and June 30, 2022 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modelling an adverse case and severely adverse case. In the most recently completed stress test (as of March 31, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period. With an additional stress overlay impacting the industries most affected by the Pandemic more severely, the Bank still remains well capitalized over the two-year stress period.

On June 22, 2023, the Company declared a cash dividend of $0.05 per share payable on August 24, 2023 to shareholders of record on August 10, 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 $10.7 billion as of June 30, 2023.  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 2023 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, 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;

·       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

·       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

 

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2022

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

74,852

 

 

$

70,491

 

 

$

64,202

 

 

$

55,013

 

 

$

48,520

 

Interest expense

 

 

35,931

 

 

 

26,513

 

 

 

16,162

 

 

 

9,488

 

 

 

5,627

 

Net interest income

 

 

38,921

 

 

 

43,978

 

 

 

48,040

 

 

 

45,525

 

 

 

42,893

 

Wealth management fee income

 

 

14,252

 

 

 

13,762

 

 

 

12,983

 

 

 

12,943

 

 

 

13,891

 

Service charges and fees

 

 

1,320

 

 

 

1,258

 

 

 

1,150

 

 

 

1,060

 

 

 

1,063

 

Bank owned life insurance

 

 

305

 

 

 

297

 

 

 

321

 

 

 

299

 

 

 

310

 

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

 

 

15

 

 

 

21

 

 

 

25

 

 

 

60

 

 

 

151

 

Gain/(loss) on loans held for sale at lower of cost or
fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee income related to loan level, back-to-back
swaps (A)

 

 

 

 

 

 

 

 

293

 

 

 

 

 

 

 

Gain on sale of SBA loans (A)

 

 

838

 

 

 

865

 

 

 

624

 

 

 

622

 

 

 

2,675

 

Corporate advisory fee income (A)

 

 

15

 

 

 

80

 

 

 

8

 

 

 

102

 

 

 

33

 

Other income

 

 

2,039

 

 

 

1,567

 

 

 

1,380

 

 

 

1,868

 

 

 

860

 

Fair value adjustment for CRA equity security

 

 

(209

)

 

 

209

 

 

 

28

 

 

 

(571

)

 

 

(475

)

Total other income

 

 

18,575

 

 

 

18,059

 

 

 

16,812

 

 

 

16,383

 

 

 

18,508

 

Salaries and employee benefits (B)

 

 

26,354

 

 

 

24,586

 

 

 

22,489

 

 

 

22,656

 

 

 

21,882

 

Premises and equipment

 

 

4,729

 

 

 

4,374

 

 

 

4,898

 

 

 

4,534

 

 

 

4,640

 

FDIC insurance expense

 

 

729

 

 

 

711

 

 

 

455

 

 

 

510

 

 

 

503

 

Other expenses

 

 

5,880

 

 

 

5,903

 

 

 

5,570

 

 

 

5,860

 

 

 

5,634

 

Total operating expenses

 

 

37,692

 

 

 

35,574

 

 

 

33,412

 

 

 

33,560

 

 

 

32,659

 

Pretax income before provision for credit losses

 

 

19,804

 

 

 

26,463

 

 

 

31,440

 

 

 

28,348

 

 

 

28,742

 

Provision for credit losses

 

 

1,696

 

 

 

1,513

 

 

 

1,930

 

 

 

599

 

 

 

1,449

 

Income before income taxes

 

 

18,108

 

 

 

24,950

 

 

 

29,510

 

 

 

27,749

 

 

 

27,293

 

Income tax expense (C)

 

 

4,963

 

 

 

6,595

 

 

 

8,931

 

 

 

7,623

 

 

 

7,193

 

Net income

 

$

13,145

 

 

$

18,355

 

 

$

20,579

 

 

$

20,126

 

 

$

20,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue (D)

 

$

57,496

 

 

$

62,037

 

 

$

64,852

 

 

$

61,908

 

 

$

61,401

 

Per Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (basic)

 

$

0.73

 

 

$

1.03

 

 

$

1.15

 

 

$

1.11

 

 

$

1.10

 

Earnings per share (diluted)

 

 

0.73

 

 

 

1.01

 

 

 

1.12

 

 

 

1.09

 

 

 

1.08

 

Weighted average number of common
shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,930,611

 

 

 

17,841,203

 

 

 

17,915,058

 

 

 

18,072,385

 

 

 

18,325,605

 

Diluted

 

 

18,078,848

 

 

 

18,263,310

 

 

 

18,382,193

 

 

 

18,420,661

 

 

 

18,637,340

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets annualized (ROAA)

 

 

0.82

%

 

 

1.16

%

 

 

1.33

%

 

 

1.30

%

 

 

1.30

%

Return on average equity annualized (ROAE)

 

 

9.43

%

 

 

13.50

%

 

 

15.73

%

 

 

15.21

%

 

 

15.43

%

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

 

 

10.30

%

 

 

14.78

%

 

 

17.30

%

 

 

16.73

%

 

 

17.00

%

Net interest margin (tax-equivalent basis)

 

 

2.49

%

 

 

2.88

%

 

 

3.12

%

 

 

2.98

%

 

 

2.83

%

GAAP efficiency ratio (F)

 

 

65.56

%

 

 

57.34

%

 

 

51.52

%

 

 

54.21

%

 

 

53.19

%

Operating expenses / average assets annualized

 

 

2.36

%

 

 

2.26

%

 

 

2.15

%

 

 

2.17

%

 

 

2.11

%


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

(E) 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.

(F) 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 Six Months Ended

 

 

 

 

 

 

 

 

 

June 30,

 

 

Change

 

 

 

2023

 

 

2022

 

 

$

 

 

%

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

145,343

 

 

$

92,660

 

 

$

52,683

 

 

 

57

%

Interest expense

 

 

62,444

 

 

 

10,145

 

 

 

52,299

 

 

 

516

%

Net interest income

 

 

82,899

 

 

 

82,515

 

 

 

384

 

 

 

0

%

Wealth management fee income

 

 

28,014

 

 

 

28,725

 

 

 

(711

)

 

 

-2

%

Service charges and fees

 

 

2,578

 

 

 

2,015

 

 

 

563

 

 

 

28

%

Bank owned life insurance

 

 

602

 

 

 

623

 

 

 

(21

)

 

 

-3

%

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

 

 

36

 

 

 

398

 

 

 

(362

)

 

 

-91

%

Gain on loans held for sale at lower of cost or fair value

 

 

 

 

 

 

 

 

 

 

N/A

 

Fee income related to loan level, back-to-back swaps (A)

 

 

 

 

 

 

 

 

 

 

N/A

 

Gain on sale of SBA loans (A)

 

 

1,703

 

 

 

5,519

 

 

 

(3,816

)

 

 

-69

%

Corporate advisory fee income (A)

 

 

95

 

 

 

1,594

 

 

 

(1,499

)

 

 

-94

%

Other income

 

 

3,606

 

 

 

2,114

 

 

 

1,492

 

 

 

71

%

Loss on securities sale, net (B)

 

 

 

 

 

(6,609

)

 

 

6,609

 

 

 

-100

%

Fair value adjustment for CRA equity security

 

 

 

 

 

(1,157

)

 

 

1,157

 

 

 

-100

%

Total other income

 

 

36,634

 

 

 

33,222

 

 

 

3,412

 

 

 

10

%

Salaries and employee benefits (C)

 

 

50,940

 

 

 

44,331

 

 

 

6,609

 

 

 

15

%

Premises and equipment

 

 

9,103

 

 

 

9,287

 

 

 

(184

)

 

 

-2

%

FDIC insurance expense

 

 

1,440

 

 

 

974

 

 

 

466

 

 

 

48

%

Swap valuation allowance

 

 

 

 

 

673

 

 

 

(673

)

 

 

-100

%

Other expenses

 

 

11,783

 

 

 

11,563

 

 

 

220

 

 

 

2

%

Total operating expenses

 

 

73,266

 

 

 

66,828

 

 

 

6,438

 

 

 

10

%

Pretax income before provision for credit losses

 

 

46,267

 

 

 

48,909

 

 

 

(2,642

)

 

 

-5

%

Provision for credit losses

 

 

3,209

 

 

 

3,824

 

 

 

(615

)

 

 

-16

%

Income before income taxes

 

 

43,058

 

 

 

45,085

 

 

 

(2,027

)

 

 

-4

%

Income tax expense

 

 

11,558

 

 

 

11,544

 

 

 

14

 

 

 

0

%

Net income

 

$

31,500

 

 

$

33,541

 

 

$

(2,041

)

 

 

-6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue (D)

 

$

119,533

 

 

$

115,737

 

 

$

3,796

 

 

 

3

%

Per Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (basic)

 

$

1.76

 

 

$

1.83

 

 

$

(0.07

)

 

 

-4

%

Earnings per share (diluted)

 

 

1.74

 

 

 

1.79

 

 

 

(0.05

)

 

 

-3

%

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,886,154

 

 

 

18,332,272

 

 

 

(446,118

)

 

 

-2

%

Diluted

 

 

18,153,267

 

 

 

18,782,559

 

 

 

(629,292

)

 

 

-3

%

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (ROAA)

 

 

0.99

%

 

 

1.09

%

 

 

(0.10

)%

 

 

-9

%

Return on average equity (ROAE)

 

 

11.44

%

 

 

12.59

%

 

 

(1.15

)%

 

 

-9

%

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

 

 

12.51

%

 

 

13.86

%

 

 

(1.35

)%

 

 

-10

%

Net interest margin (tax-equivalent basis)

 

 

2.68

%

 

 

2.76

%

 

 

(0.08

)%

 

 

-3

%

GAAP efficiency ratio (F)

 

 

61.29

%

 

 

57.74

%

 

 

3.55

%

 

 

6

%

Operating expenses / average assets

 

 

2.31

%

 

 

2.16

%

 

 

0.15

%

 

 

7

%


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

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

(D) Total revenue equals the sum of net interest income plus total other income.

(E) 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.

(F) 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

 

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

4,859

 

 

$

6,514

 

 

$

5,937

 

 

$

5,066

 

 

$

6,203

 

Federal funds sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

 

 

166,769

 

 

 

244,779

 

 

 

184,138

 

 

 

103,214

 

 

 

147,222

 

Total cash and cash equivalents

 

 

171,628

 

 

 

251,293

 

 

 

190,075

 

 

 

108,280

 

 

 

153,425

 

Securities available for sale

 

 

540,519

 

 

 

556,266

 

 

 

554,648

 

 

 

497,880

 

 

 

556,791

 

Securities held to maturity

 

 

110,438

 

 

 

111,609

 

 

 

102,291

 

 

 

103,551

 

 

 

105,048

 

CRA equity security, at fair value

 

 

12,985

 

 

 

13,194

 

 

 

12,985

 

 

 

12,957

 

 

 

13,528

 

FHLB and FRB stock, at cost (A)

 

 

35,402

 

 

 

30,338

 

 

 

30,672

 

 

 

14,986

 

 

 

13,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

 

575,238

 

 

 

544,655

 

 

 

525,756

 

 

 

519,088

 

 

 

512,341

 

Multifamily mortgage

 

 

1,884,369

 

 

 

1,871,387

 

 

 

1,863,915

 

 

 

1,856,675

 

 

 

1,876,783

 

Commercial mortgage

 

 

624,710

 

 

 

613,911

 

 

 

624,625

 

 

 

638,903

 

 

 

657,812

 

Commercial and industrial loans

 

 

2,278,133

 

 

 

2,266,837

 

 

 

2,213,762

 

 

 

2,099,917

 

 

 

2,048,474

 

Consumer loans

 

 

52,098

 

 

 

49,002

 

 

 

38,014

 

 

 

37,412

 

 

 

37,675

 

Home equity lines of credit

 

 

34,397

 

 

 

33,294

 

 

 

34,496

 

 

 

36,375

 

 

 

36,023

 

Other loans

 

 

269

 

 

 

443

 

 

 

304

 

 

 

259

 

 

 

236

 

Total loans

 

 

5,449,214

 

 

 

5,379,529

 

 

 

5,300,872

 

 

 

5,188,629

 

 

 

5,169,344

 

Less: Allowance for credit losses

 

 

62,704

 

 

 

62,250

 

 

 

60,829

 

 

 

59,683

 

 

 

59,022

 

Net loans

 

 

5,386,510

 

 

 

5,317,279

 

 

 

5,240,043

 

 

 

5,128,946

 

 

 

5,110,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment

 

 

23,814

 

 

 

23,782

 

 

 

23,831

 

 

 

23,781

 

 

 

22,804

 

Other real estate owned

 

 

 

 

 

116

 

 

 

116

 

 

 

116

 

 

 

116

 

Accrued interest receivable

 

 

20,865

 

 

 

19,143

 

 

 

25,157

 

 

 

17,816

 

 

 

23,468

 

Bank owned life insurance

 

 

47,382

 

 

 

47,261

 

 

 

47,147

 

 

 

47,072

 

 

 

46,944

 

Goodwill and other intangible assets

 

 

46,624

 

 

 

46,979

 

 

 

47,333

 

 

 

47,698

 

 

 

48,082

 

Finance lease right-of-use assets

 

 

2,461

 

 

 

2,648

 

 

 

2,835

 

 

 

3,021

 

 

 

3,209

 

Operating lease right-of-use assets

 

 

13,500

 

 

 

12,262

 

 

 

12,873

 

 

 

13,404

 

 

 

14,192

 

Other assets (B)

 

 

67,572

 

 

 

47,848

 

 

 

63,587

 

 

 

67,753

 

 

 

39,528

 

TOTAL ASSETS

 

$

6,479,700

 

 

$

6,480,018

 

 

$

6,353,593

 

 

$

6,087,261

 

 

$

6,151,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

$

1,024,105

 

 

$

1,096,549

 

 

$

1,246,066

 

 

$

1,317,954

 

 

$

1,043,225

 

Interest-bearing demand deposits

 

 

2,816,913

 

 

 

2,797,493

 

 

 

2,143,611

 

 

 

2,149,629

 

 

 

2,456,988

 

Savings

 

 

120,082

 

 

 

132,523

 

 

 

157,338

 

 

 

166,821

 

 

 

168,441

 

Money market accounts

 

 

763,026

 

 

 

873,329

 

 

 

1,228,234

 

 

 

1,178,112

 

 

 

1,217,516

 

Certificates of deposit – Retail

 

 

384,106

 

 

 

357,131

 

 

 

318,573

 

 

 

345,047

 

 

 

375,387

 

Certificates of deposit – Listing Service

 

 

10,822

 

 

 

15,922

 

 

 

25,358

 

 

 

30,647

 

 

 

31,348

 

Subtotal “customer” deposits

 

 

5,119,054

 

 

 

5,272,947

 

 

 

5,119,180

 

 

 

5,188,210

 

 

 

5,292,905

 

IB Demand – Brokered

 

 

10,000

 

 

 

10,000

 

 

 

60,000

 

 

 

85,000

 

 

 

85,000

 

Certificates of deposit – Brokered

 

 

69,443

 

 

 

25,895

 

 

 

25,984

 

 

 

25,974

 

 

 

25,963

 

Total deposits

 

 

5,198,497

 

 

 

5,308,842

 

 

 

5,205,164

 

 

 

5,299,184

 

 

 

5,403,868

 

Short-term borrowings

 

 

485,360

 

 

 

378,800

 

 

 

379,530

 

 

 

32,369

 

 

 

 

Finance lease liability

 

 

4,071

 

 

 

4,385

 

 

 

4,696

 

 

 

5,003

 

 

 

5,305

 

Operating lease liability

 

 

14,308

 

 

 

13,082

 

 

 

13,704

 

 

 

14,101

 

 

 

14,756

 

Subordinated debt, net

 

 

133,131

 

 

 

133,059

 

 

 

132,987

 

 

 

132,916

 

 

 

132,844

 

Due to brokers

 

 

 

 

 

8,308

 

 

 

 

 

 

 

 

 

 

Other liabilities (B)

 

 

79,264

 

 

 

78,584

 

 

 

84,532

 

 

 

88,174

 

 

 

74,070

 

TOTAL LIABILITIES

 

 

5,914,631

 

 

 

5,925,060

 

 

 

5,820,613

 

 

 

5,571,747

 

 

 

5,630,843

 

Shareholders’ equity

 

 

565,069

 

 

 

554,958

 

 

 

532,980

 

 

 

515,514

 

 

 

520,324

 

TOTAL LIABILITIES AND

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

$

6,479,700

 

 

$

6,480,018

 

 

$

6,353,593

 

 

$

6,087,261

 

 

$

6,151,167

 

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

 

 

$

10.4

 

 

$

9.9

 

 

$

9.3

 

 

$

9.5

 


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

(B) The change in other assets and other liabilities was primarily due to the change in the fair value of our back-to-back swap program.


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

 

 

As of

 

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2022

 

Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due over 90 days and still accruing

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Nonaccrual loans

 

 

34,505

 

 

 

28,659

 

 

 

18,974

 

 

 

15,724

 

 

 

15,078

 

Other real estate owned

 

 

 

 

 

116

 

 

 

116

 

 

 

116

 

 

 

116

 

Total nonperforming assets

 

$

34,505

 

 

$

28,775

 

 

$

19,090

 

 

$

15,840

 

 

$

15,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.63

%

 

 

0.53

%

 

 

0.36

%

 

 

0.30

%

 

 

0.29

%

Nonperforming assets to total assets

 

 

0.53

%

 

 

0.44

%

 

 

0.30

%

 

 

0.26

%

 

 

0.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing modifications (A)(B)

 

$

248

 

 

$

248

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing TDRs (C)(D)

 

$

 

 

$

 

 

$

965

 

 

$

2,761

 

 

$

2,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due 30 through 89 days and still accruing

 

$

14,524

 

 

$

2,762

 

 

$

7,592

 

 

$

7,248

 

 

$

3,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans subject to special mention

 

$

53,606

 

 

$

46,566

 

 

$

64,842

 

 

$

82,107

 

 

$

98,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans

 

$

58,655

 

 

$

58,010

 

 

$

42,985

 

 

$

27,507

 

 

$

27,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated loans

 

$

33,867

 

 

$

27,736

 

 

$

16,732

 

 

$

13,047

 

 

$

13,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses ("ACL"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of quarter

 

$

62,250

 

 

$

60,829

 

 

$

59,683

 

 

$

59,022

 

 

$

58,386

 

Day one CECL adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses (E)

 

 

1,666

 

 

 

1,464

 

 

 

2,103

 

 

 

665

 

 

 

646

 

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

 

 

(1,212

)

 

 

(43

)

 

 

(957

)

 

 

(4

)

 

 

(10

)

End of quarter

 

$

62,704

 

 

$

62,250

 

 

$

60,829

 

 

$

59,683

 

 

$

59,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL to nonperforming loans

 

 

181.72

%

 

 

217.21

%

 

 

320.59

%

 

 

379.57

%

 

 

391.44

%

ACL to total loans

 

 

1.15

%

 

 

1.16

%

 

 

1.15

%

 

 

1.15

%

 

 

1.14

%

Collectively evaluated ACL to total loans (G)

 

 

1.11

%

 

 

1.11

%

 

 

1.12

%

 

 

1.10

%

 

 

1.09

%


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

(B) Excludes modifications included in nonaccrual loans of $777,000 at June 30, 2023.

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

(D) Excludes TDRs included in nonaccrual loans in the following amounts:  $13.4 million at December 31, 2022; $12.9 million at September 30, 2022 and $13.5 million at June 30, 2022. On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.

(E) Provision to roll forward the ACL excludes a provision of $30,000 at June 30, 2023, $49,000 at March 31, 2023, a credit of $173,000 at December 31, 2022, a credit of $66,000 at September 30, 2022 and a provision of $803,000 at June 30, 2022 related to off-balance sheet commitments.

(F) 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.

(G) 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

 

 

 

June 30,

 

 

December 31,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2022

 

Capital Adequacy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to total assets (A)

 

 

 

 

8.72

%

 

 

 

 

8.39

%

 

 

 

 

8.46

%

Tangible equity to tangible assets (B)

 

 

 

 

8.06

%

 

 

 

 

7.70

%

 

 

 

 

7.74

%

Book value per share (C)

 

 

 

$

31.59

 

 

 

 

$

29.92

 

 

 

 

$

28.60

 

Tangible book value per share (D)

 

 

 

$

28.98

 

 

 

 

$

27.26

 

 

 

 

$

25.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible equity to tangible assets excluding other comprehensive loss*

 

 

 

 

9.02

%

 

 

 

 

8.77

%

 

 

 

 

8.62

%

Tangible book value per share excluding other comprehensive loss*

 

 

 

$

32.78

 

 

 

 

$

31.43

 

 

 

 

$

29.19

 


*Excludes other comprehensive loss of $68.0 million for the quarter ended June 30, 2023, $74.2 million for the quarter ended December 31, 2022, and $58.7 million for the quarter ended June 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

 

 

June 30,

 

December 31,

 

June 30,

 

 

2023

 

 

2022

 

 

2022

 

Regulatory Capital – Holding Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier I leverage

 

$

584,140

 

 

9.06

%

 

$

557,627

 

 

8.90

%

 

$

528,646

 

 

8.51

%

Tier I capital to risk-weighted assets

 

 

584,140

 

 

11.47

 

 

 

557,627

 

 

11.02

 

 

 

528,646

 

 

10.70

 

Common equity tier I capital ratio
to risk-weighted assets

 

 

584,122

 

 

11.47

 

 

 

557,609

 

 

11.02

 

 

 

528,622

 

 

10.70

 

Tier I & II capital to risk-weighted assets

 

 

773,808

 

 

15.20

 

 

 

745,197

 

 

14.73

 

 

 

721,503

 

 

14.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital – Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier I leverage (E)

 

$

696,399

 

 

10.80

%

 

$

680,137

 

 

10.85

%

 

$

646,884

 

 

10.42

%

Tier I capital to risk-weighted assets (F)

 

 

696,399

 

 

13.69

 

 

 

680,137

 

 

13.45

 

 

 

646,884

 

 

13.10

 

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

 

 

696,381

 

 

13.68

 

 

 

680,119

 

 

13.45

 

 

 

646,860

 

 

13.10

 

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

 

 

759,935

 

 

14.93

 

 

 

741,719

 

 

14.67

 

 

 

706,897

 

 

14.31

 


(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($258 million)

(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($433 million)

(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($356 million)

(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($534 million)


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

 

 

For the Quarters Ended

 

 

 

June 30,

 

 

March 31,

 

 

Dec 31,

 

 

Sept 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2022

 

Residential loans retained

 

$

39,358

 

 

$

30,303

 

 

$

28,051

 

 

$

17,885

 

 

$

35,172

 

Residential loans sold

 

 

1,072

 

 

 

1,477

 

 

 

1,840

 

 

 

4,898

 

 

 

9,886

 

Total residential loans

 

 

40,430

 

 

 

31,780

 

 

 

29,891

 

 

 

22,783

 

 

 

45,058

 

Commercial real estate

 

 

43,235

 

 

 

18,990

 

 

 

6,747

 

 

 

7,320

 

 

 

13,960

 

Multifamily

 

 

26,662

 

 

 

30,150

 

 

 

37,500

 

 

 

4,000

 

 

 

74,564

 

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

 

 

158,972

 

 

 

207,814

 

 

 

238,568

 

 

 

251,249

 

 

 

332,801

 

SBA

 

 

13,713

 

 

 

9,950

 

 

 

17,431

 

 

 

5,682

 

 

 

10,534

 

Wealth lines of credit (A)

 

 

3,950

 

 

 

23,225

 

 

 

7,700

 

 

 

4,450

 

 

 

12,575

 

Total commercial loans

 

 

246,532

 

 

 

290,129

 

 

 

307,946

 

 

 

272,701

 

 

 

444,434

 

Installment loans

 

 

4,587

 

 

 

12,086

 

 

 

1,845

 

 

 

1,253

 

 

 

100

 

Home equity lines of credit (A)

 

 

6,107

 

 

 

2,921

 

 

 

3,815

 

 

 

5,614

 

 

 

3,897

 

Total loans closed

 

$

297,656

 

 

$

336,916

 

 

$

343,497

 

 

$

302,351

 

 

$

493,489

 


 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

Residential loans retained

 

$

69,661

 

 

$

76,719

 

Residential loans sold

 

 

2,549

 

 

 

25,555

 

Total residential loans

 

 

72,210

 

 

 

102,274

 

Commercial real estate

 

 

62,225

 

 

 

39,535

 

Multifamily

 

 

56,812

 

 

 

340,214

 

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

 

 

366,786

 

 

 

475,830

 

SBA

 

 

23,663

 

 

 

36,627

 

Wealth lines of credit (A)

 

 

27,175

 

 

 

21,975

 

Total commercial loans

 

 

536,661

 

 

 

914,181

 

Installment loans

 

 

16,673

 

 

 

231

 

Home equity lines of credit (A)

 

 

9,028

 

 

 

5,238

 

Total loans closed

 

$

634,572

 

 

$

1,021,924

 


(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

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

 

Average

 

 

Income/

 

 

 

 

 

Average

 

 

Income/

 

 

 

 

 

 

Balance

 

 

Expense

 

 

Yield

 

 

Balance

 

 

Expense

 

 

Yield

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable (A)

 

$

806,447

 

 

$

4,900

 

 

 

2.43

%

 

$

774,145

 

 

$

3,535

 

 

 

1.83

%

Tax-exempt (A) (B)

 

 

1,858

 

 

 

20

 

 

 

4.31

 

 

 

4,193

 

 

 

40

 

 

 

3.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (B) (C):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages

 

 

557,575

 

 

 

4,942

 

 

 

3.55

 

 

 

513,666

 

 

 

3,630

 

 

 

2.83

 

Commercial mortgages

 

 

2,504,268

 

 

 

26,839

 

 

 

4.29

 

 

 

2,552,128

 

 

 

21,185

 

 

 

3.32

 

Commercial

 

 

2,241,817

 

 

 

35,457

 

 

 

6.33

 

 

 

2,024,457

 

 

 

19,348

 

 

 

3.82

 

Commercial construction

 

 

6,977

 

 

 

165

 

 

 

9.46

 

 

 

16,186

 

 

 

162

 

 

 

4.00

 

Installment

 

 

51,269

 

 

 

841

 

 

 

6.56

 

 

 

37,235

 

 

 

297

 

 

 

3.19

 

Home equity

 

 

33,650

 

 

 

633

 

 

 

7.52

 

 

 

38,061

 

 

 

331

 

 

 

3.48

 

Other

 

 

271

 

 

 

7

 

 

 

10.33

 

 

 

258

 

 

 

6

 

 

 

9.30

 

Total loans

 

 

5,395,827

 

 

 

68,884

 

 

 

5.11

 

 

 

5,181,991

 

 

 

44,959

 

 

 

3.47

 

Federal funds sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

 

 

141,968

 

 

 

1,451

 

 

 

4.09

 

 

 

164,066

 

 

 

314

 

 

 

0.77

 

Total interest-earning assets

 

 

6,346,100

 

 

 

75,255

 

 

 

4.74

%

 

 

6,124,395

 

 

 

48,848

 

 

 

3.19

%

Noninterest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

7,800

 

 

 

 

 

 

 

 

 

9,715

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(63,045

)

 

 

 

 

 

 

 

 

(59,629

)

 

 

 

 

 

 

Premises and equipment

 

 

23,745

 

 

 

 

 

 

 

 

 

22,952

 

 

 

 

 

 

 

Other assets

 

 

85,969

 

 

 

 

 

 

 

 

 

96,232

 

 

 

 

 

 

 

Total noninterest-earning assets

 

 

54,469

 

 

 

 

 

 

 

 

 

69,270

 

 

 

 

 

 

 

Total assets

 

$

6,400,569

 

 

 

 

 

 

 

 

$

6,193,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

2,834,140

 

 

$

22,219

 

 

 

3.14

%

 

$

2,493,668

 

 

$

2,330

 

 

 

0.37

%

Money markets

 

 

788,745

 

 

 

3,853

 

 

 

1.95

 

 

 

1,234,564

 

 

 

579

 

 

 

0.19

 

Savings

 

 

125,555

 

 

 

45

 

 

 

0.14

 

 

 

163,062

 

 

 

5

 

 

 

0.01

 

Certificates of deposit – retail

 

 

385,211

 

 

 

2,462

 

 

 

2.56

 

 

 

411,202

 

 

 

651

 

 

 

0.63

 

Subtotal interest-bearing deposits

 

 

4,133,651

 

 

 

28,579

 

 

 

2.77

 

 

 

4,302,496

 

 

 

3,565

 

 

 

0.33

 

Interest-bearing demand – brokered

 

 

10,000

 

 

 

125

 

 

 

5.00

 

 

 

85,000

 

 

 

364

 

 

 

1.71

 

Certificates of deposit – brokered

 

 

26,165

 

 

 

196

 

 

 

3.00

 

 

 

33,470

 

 

 

261

 

 

 

3.12

 

Total interest-bearing deposits

 

 

4,169,816

 

 

 

28,900

 

 

 

2.77

 

 

 

4,420,966

 

 

 

4,190

 

 

 

0.38

 

Borrowings

 

 

413,961

 

 

 

5,384

 

 

 

5.20

 

 

 

3,873

 

 

 

10

 

 

 

1.03

 

Capital lease obligation

 

 

4,187

 

 

 

50

 

 

 

4.78

 

 

 

5,406

 

 

 

64

 

 

 

4.74

 

Subordinated debt

 

 

133,090

 

 

 

1,597

 

 

 

4.80

 

 

 

132,803

 

 

 

1,363

 

 

 

4.11

 

Total interest-bearing liabilities

 

 

4,721,054

 

 

 

35,931

 

 

 

3.04

%

 

 

4,563,048

 

 

 

5,627

 

 

 

0.49

%

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

1,033,176

 

 

 

 

 

 

 

 

 

1,029,538

 

 

 

 

 

 

 

Accrued expenses and other liabilities

 

 

88,911

 

 

 

 

 

 

 

 

 

79,882

 

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

1,122,087

 

 

 

 

 

 

 

 

 

1,109,420

 

 

 

 

 

 

 

Shareholders’ equity

 

 

557,428

 

 

 

 

 

 

 

 

 

521,197

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

6,400,569

 

 

 

 

 

 

 

 

$

6,193,665

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

39,324

 

 

 

 

 

 

 

 

$

43,221

 

 

 

 

Net interest spread

 

 

 

 

 

 

 

 

1.70

%

 

 

 

 

 

 

 

 

2.70

%

Net interest margin (D)

 

 

 

 

 

 

 

 

2.49

%

 

 

 

 

 

 

 

 

2.83

%


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

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(C) Loans are stated net of unearned income and include nonaccrual loans.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

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

 

 

For the Three Months Ended

 

 

 

June 30, 2023

 

 

March 31, 2023

 

 

 

Average

 

 

Income/

 

 

 

 

 

Average

 

 

Income/

 

 

 

 

 

 

Balance

 

 

Expense

 

 

Yield

 

 

Balance

 

 

Expense

 

 

Yield

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable (A)

 

$

806,447

 

 

$

4,900

 

 

 

2.43

%

 

$

791,125

 

 

$

4,471

 

 

 

2.26

%

Tax-exempt (A) (B)

 

 

1,858

 

 

 

20

 

 

 

4.31

 

 

 

1,864

 

 

 

19

 

 

 

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (B) (C):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages

 

 

557,575

 

 

 

4,942

 

 

 

3.55

 

 

 

529,570

 

 

 

4,283

 

 

 

3.24

 

Commercial mortgages

 

 

2,504,268

 

 

 

26,839

 

 

 

4.29

 

 

 

2,478,645

 

 

 

25,917

 

 

 

4.18

 

Commercial

 

 

2,241,817

 

 

 

35,457

 

 

 

6.33

 

 

 

2,201,801

 

 

 

33,369

 

 

 

6.06

 

Commercial construction

 

 

6,977

 

 

 

165

 

 

 

9.46

 

 

 

4,296