Peapack-Gladstone Financial Corporation Reports Third Quarter Results

Bedminster, N.J., Oct. 28, 2020 (GLOBE NEWSWIRE) -- via NewMediaWire -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2020 results.

This earnings release should be read in conjunction with the Company’s Q3 2020 Investor Update (and Supplemental Financial Information), 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 $143.22 million, net income of $23.16 million and diluted earnings per share (“EPS”) of $1.22 for the nine months ended September 30, 2020, compared to $128.53 million, $35.20 million and $1.81, respectively, for the nine months ended September 30, 2019.

The 2020 nine-month period included increased net interest income and increased non-interest income due principally to earnings from the Paycheck Protection Program (“PPP”) and increased wealth management income (primarily due to the acquisition of Point View Wealth Management acquired in September 2019) , which was partially offset by increased operating expenses (due in part to the previous mentioned firm acquired in September 2019).

The 2020 nine-month period also included a tax benefit of $3.2 million recorded in the first quarter of 2020 caused by the changes in the treatment of tax net operating losses (“NOL”) under the provisions of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.   The decrease in net income and EPS for the 2020 nine-month period was the result of a $30.05 million provision for loan losses due to the current environment created by the COVID-19 pandemic, which led to increased qualitative loss factors when calculating the allowance for loan losses. This compared to a $2.05 million provision for the 2019 nine-month period.   

For the quarter ended September 30, 2020, the Company recorded revenue of $52.36 million, net income of $13.55 million and EPS of $0.71, compared to $44.51 million, $12.23 million and $0.63, respectively, for the same three-month period last year.

The 2020 quarter included increased net interest income and increased non-interest income due principally to earnings from the PPP and increased wealth management income (primarily due to the acquisition of Point View  in September 2019) , which was partially offset by increased operating expenses (due in part to the previous mentioned firm acquired in September 2019), and an increase in the provision for loan and lease losses to $5.15 million due to the current environment created by the COVID-19 pandemic, compared to an $800,000 provision for loan and lease losses for the 2019 quarter.   

Douglas L. Kennedy, President and CEO, said, “As I mentioned last quarter, our employees worked tirelessly to process approximately 2,500 PPP applications resulting in approximately $600 million in fundings. The Bank made a decision to sell a significant portion ($355 million) of its PPP loans in the third quarter, which generated a $7.4 million gain. The sale was to a well-respected firm that focuses on the forgiveness and ongoing servicing process associated with PPP loans, who will serve our clients well. Our client relationship is still maintained as we maintained all depository relationships (including those from the PPP loan fundings) and all loan relationships outside of PPP loans. Further the sale has given us the ability to free up internal resources to focus on generating new business and continuing to provide excellent service to our clients.” 

As of September 30, 2020, the Bank still holds $202 million of PPP loans (almost all of which exceed $2.0 million in original principal amount) with approximately $1.5 million of net deferred fees which will be recognized into income over the two-year maturity of the loan or as forgiven or repaid.

Mr. Kennedy also said, “The COVID-19 pandemic continues to have a devastating effect on businesses both locally and nationally. We have allowed our commercial and business clients to have their loan deferred for a six-month period. As of June 30, 2020, our deferrals stood at $914 million. As of September 30, 2020, deferrals were $828 million. An additional $247 million came off deferral status in October bringing deferrals down to $581 million. An additional $449 million is scheduled to come off in November. Further, as of this writing, our deferrals in sectors with COVID elevated residual risk (Hospitality and Food Services and Retail - Non-Grocery Anchored) totaled $95 million or 2% of total loans.”

For more information about the Company’s loan deferrals, including a breakdown by loan type and industry, as well as detail concerning our loan exposure to industries, please see the Q3 2020 Investor Update (and Supplemental financial Information).

EXECUTIVE SUMMARY:

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

Year over Year Comparison

		Nine Months Ended				Nine Months Ended
		September 30,				September 30,					Increase/
(Dollars in millions, except per share data)		2020				2019					(Decrease)
Net interest income		$	95.87			$	89.36				$	6.51				7	%
Wealth management fee income (A)			30.07				28.24					1.83				6
Capital markets activity (B)			4.81				4.93					(0.12	)			(2	)
Other income (C)			12.47				6.00					6.47				108
Total other income			47.35				39.17					8.18				21
Operating expenses			85.71				78.15					7.56				10
Pretax income before provision for loan losses			57.51				50.38					7.13				14
Provision for loan and lease losses (D)			30.05				2.05					28.00				1,366
Pretax income			27.46				48.33					(20.87	)			(43	)
Income tax expense (E)			4.30				13.13					(8.83	)			(67	)
Net income		$	23.16			$	35.20				$	(12.04	)			(34	)%
Diluted EPS		$	1.22			$	1.81				$	(0.59	)			(33	)%
Total Revenue		$	143.22			$	128.53				$	14.69				11	%
Return on average assets annualized			0.54	%			0.99	%				(0.45	)
Return on average equity annualized			6.07	%			9.67	%				(3.60	)

1. The nine months ended September 30, 2020 included wealth management fee income and expense related to Point View Wealth Management, (“Point View”), which was acquired effective September 1, 2019. 
2. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities.
3. The nine months ended September 30, 2020 includes a gain on sale of $7.4 million on the sale of $355 million of PPP loans.
4. The nine months ended September 30, 2020 included a provision for loan and lease losses of $30.05 million, which was primarily due to the current environment created by the COVID-19 pandemic.
5. The 2020 period included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the Federal tax rate was 14% higher.

            September 2020 Quarter Compared to Prior Year Quarter

		Three Months Ended					Three Months Ended
		September 30,					September 30,				Increase/
(Dollars in millions, except per share data)		2020					2019				(Decrease)
Net interest income		$	32.15				$	30.09			$	2.06				7	%
Wealth management fee income (A)			10.12					9.50				0.62				7
Capital markets activity (B)			1.03					2.77				(1.74	)			(63	)
Other income (C)			9.06					2.15				6.91				321
Total other income			20.21					14.42				5.79				40
Operating expenses			28.46					26.26				2.20				8
Pretax income before provision for loan losses			23.90					18.25				5.65				31
Provision for loan and lease losses (D)			5.15					0.80				4.35				544
Pretax income			18.75					17.45				1.30				7
Income tax expense			5.20					5.22				(0.02	)			(0	)
Net income		$	13.55				$	12.23			$	1.32				11	%
Diluted EPS		$	0.71				$	0.63			$	0.08				12	%
Total Revenue		$	52.36				$	44.51			$	7.85				18	%
Return on average assets annualized			0.89	%				1.00	%			(0.11	)
Return on average equity annualized			10.53	%				9.87	%			0.66

1. The September 2020 quarter included a full quarter of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019. 
2. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities.
3. The quarter ended September 30, 2020 includes a gain on sale of $7.4 million on the sale of $355 million of PPP loans.
4. The September 2020 quarter included a provision for loan and lease losses of $5.15 million.  The increase in the provision for loan and lease losses was primarily due to the current environment created by the COVID-19 pandemic.

September 2020 Quarter Compared to Linked Quarter

		Three Months Ended				Three Months Ended
		September 30,				June 30,					Increase/
(Dollars in millions, except per share data)		2020				2020					(Decrease)
Net interest income		$	32.15			$	31.97				$	0.18				1	%
Wealth management fee income			10.12				10.00					0.12				1
Capital markets activity (A)			1.03				1.01					0.02				2
Other income (B)			9.06				1.61					7.45				463
Total other income			20.21				12.62					7.59				60
Operating expenses			28.46				29.01					(0.55	)			(2	)
Pretax income before provision for loan losses			23.90				15.58					8.32				53
Provision for loan and lease losses			5.15				4.90					0.25				5
Pretax (loss)/income			18.75				10.68					8.07				76
Income tax expense			5.20				2.44					2.76				113
Net income		$	13.55			$	8.24				$	5.31				64	%
Diluted EPS		$	0.71			$	0.43				$	0.28				65	%
Total Revenue		$	52.36			$	44.59				$	7.77				17	%
Return on average assets annualized			0.89	%			0.56	%				0.33
Return on average equity annualized			10.53	%			6.56	%				3.97

1. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities. 
2. The quarter ended September 30, 2020 includes a gain on sale of $7.4 million on the sale of $355 million of PPP loans.

The Company’s near-term priorities include:
                   

• Continued emphasis on the health and safety of our employees and clients.
• Actively manage credit risk associated with the COVID-19 pandemic.
• Grow and expand our core wealth management and commercial banking businesses.
• Prudently manage costs, capital and liquidity, but remain opportunistic for accretive wealth M&A and talent lift-outs.
• Evaluate office space and branch requirements.
• Accelerate digital enhancement initiatives to improve the client experience.
• Grow fee income to 35% to 45% of total bank revenue.

Other select highlights for the quarter included:

• Wealth management fee income, which comprised approximately 21% of the Company’s total revenue for the nine-months ended September 30, 2020, continues to contribute significantly to the Company’s diversified revenue sources.
• As of September 30, 2020, total C&I loans (including PPP loans) comprised 43% of the total loan portfolio. 
• Deposits totaled $4.86 billion at September 30, 2020.  This reflected net growth of $616 million or 15% (19% annualized) when compared to $4.24 billion at December 31, 2019. 
• The Company’s core net interest margin stabilized in the quarter when compared to the June 2020 quarter. (See subsequent discussion of Net Interest Income / Net Interest Margin)
• In addition to $1.3 billion (22% of total assets) of balance sheet liquidity (investments, interest-earning deposits and cash) as of September 30, 2020, the Company also has access to approximately $2.7 billion of available secured funding at the Federal Home Loan Bank and the Federal Reserve.
• The Company’s and Bank’s capital ratios at September 30, 2020 remain strong and the Company’s tangible book value per share at September 30, 2020 was $25.53 reflecting an increase of 7% from $23.91 at September 30, 2019, despite a higher than normal provision for loan and lease losses during 2020.
• Nonperforming assets at September 30, 2020 declined $18.1 million to $8.7 million, or 0.15% of total assets at September 30, 2020, from $26.8 million or 0.43% at June 30, 2020.   

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management Business

In the September 2020 quarter, the Bank’s wealth management business generated $10.12 million in fee income, compared to $9.50 million for the September 2019 quarter, and $10.00 million for the June 2020 quarter. The September 2020 and June 2020 quarters included three months of fee income related to Point View, which was acquired effective September 1, 2019, while the September 2019 quarter included one month of fee income.

The market value of the Company’s assets under management and/or administration (“AUM/AUA”) increased from $7.2 billion at June 30, 2020 to a record $7.6 billion at September 30, 2020, reflecting a 6% (22% annualized) increase.

John P. Babcock, President of the “Peapack Private Wealth Management” division, said, “Client retention during the COVID-19 crisis continues to be excellent with negligible account closings and no atypical withdrawal activity. Proactive client outreach continues at full strength.” Babcock went on to note, “Year-to-date gross client inflows totaled $528 million. We continue to look to grow our wealth business organically and through acquisition, and our pipeline for both is strong.  At year-end 2020, we will combine two more of our acquired RIAs with Peapack Private to further integrate our wealth acquisitions.”

Loans / Commercial Banking

Total loans of $4.46 billion at September 30, 2020 increased $47 million when compared to the December 31, 2019 balance, and declined $441 million from $4.90 billion at June 30, 2020. Growth as compared to December 31, 2019 was driven by robust PPP loan originations of $596 million during the second quarter of 2020, which was partially offset by the sale of $355 million of PPP loans during the third quarter of 2020. Excluding PPP loan originations, 2020 origination levels were less than 2019 due to the COVID-19 pandemic.

Total C&I loans (including equipment finance leases and loans of $686 million and $202 million of PPP loans) at September 30, 2020 were $1.93 billion.  This reflected net growth of $155 million when compared to $1.78 billion at December 31, 2019.  Excluding the $202 million of PPP loans at September 30, 2020, total C&I loans declined $47 million in 2020 due to the paydown of several large lines of credit, as well the Company’s workout and asset recovery efforts, including several nonaccrual and/or classified credits during Q3 2020.

The Company maintains a well-diversified loan portfolio, by loan type and by industry concentration, as detailed in the Q3 2020 Investor Update (and Supplemental Financial Information).

Mr. Kennedy noted, “Our commercial pipelines going into the fourth quarter are strong. Further, and as I noted in prior periods, our Corporate Advisory business complements our commercial banking and wealth management businesses by giving us the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our peers. Our Corporate Advisory pipelines are also strong.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale sourced deposits, volatility, and/or operational risk.  Total deposits at September 30, 2020 were $4.86 billion reflecting an increase of $616 million when compared to $4.24 billion at December 31, 2019. Noninterest bearing demand deposits increased $309 million, interest bearing demand increased $348 million, brokered deposits declined $50 million, and higher costing CDs declined $62 million.  Mr. Kennedy noted, “Of our total deposits, only 17 percent are above the FDIC insurance limit, reinforcing the “core” nature of our deposit base.”

For the quarter ended September 30, 2020, the Company’s balance sheet liquidity (investments, interest-earning deposits and cash) totaled $1.3 billion (or 22% of assets).  In addition to the $1.3 billion of balance sheet liquidity, the Company also had approximately $1.7 billion of secured funding available from the Federal Home Loan Bank. Additionally, the Company also had $1.0 billion of secured funding available from the Federal Reserve Discount Window.

Mr. Kennedy noted, “As a commercial bank, a large portion of our loans reprice when the Fed changes rates. The 150-basis point reduction in target Fed Funds near the end of Q1 2020 reduced the Company’s interest income earned on assets. However, we were able to strategically reprice our deposits over time to offset much of that decline by the end of 2020.” 

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

	Nine Months Ended									Nine Months Ended
	September 30, 2020									September 30, 2019
	NII				NIM					NII				NIM
NII/NIM excluding the below	$	91,901			2.51		%			$	88,762			2.70		%
Prepayment premiums received on loan paydowns		1,005			0.02		%				914			0.03		%
Effect of maintaining excess interest earning cash		(1,000	)		-0.19		%				(316	)		-0.08		%
Effect of PPP loans		3,961			-0.01		%				—			0.00		%
NII/NIM as reported	$	95,867			2.33		%			$	89,360			2.65		%
	Three Months Ended									Three Months Ended									Three Months Ended
	September 30, 2020									June 30, 2020									September 30, 2019
	NII				NIM					NII				NIM					NII				NIM
NII/NIM excluding the below	$	30,327			2.45		%			$	29,881			2.45		%			$	29,896			2.67		%
Prepayment premiums received on loan paydowns		104			0.01		%				376			0.03		%				236			0.02		%
Effect of maintaining excess interest earning cash		(266	)		-0.24		%				(263	)		-0.19		%				(47	)		-0.09		%
Effect of PPP loans		1,984			-0.02		%				1,977			-0.02		%				—			0.00		%
NII/NIM as reported	$	32,149			2.20		%			$	31,971			2.27		%			$	30,085			2.60		%

As shown above, the Company’s reported NIM declined 7 basis points compared to the linked quarter, while core NIM remained flat compared to the linked quarter.

Future net interest income will be benefitted by the repricing of the Company’s time certificates of deposit (“CDs”). Over the next 12-months, approximately $510 million of CDs with an average rate of approximately 1.35% will mature.

Other Noninterest Income (other than Wealth Management fee income)

Noninterest income from Capital Markets activities (loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking income) totaled $1.03 million for the September 2020 quarter compared to $1.01 million for the June 2020 quarter and $2.77 million for the September 2019 quarter.  The September 2020 quarter reflected increased mortgage banking activity due to greater refinance activity in the current low rate environment. The higher mortgage banking activity was offset by a significant decrease in loan level back-to-back swap activities and SBA lending and sale program, as there is, and will continue to be, minimal activity for such in the current environment. 

Operating Expenses

The Company’s total operating expenses were $28.46 million for the quarter ended September 30, 2020, compared to $29.01 million for the June 2020 quarter and $26.26 million for the September 2019 quarter.  The September 2020 and June 2020 quarters included three months of expenses (approximately $500,000 per quarter) related to Point View’s operations while the September 2019 quarter included one month. The June 2020 quarter also included a one-time expense of $278,000 related to the consolidation of the Whitehouse branch into the Oldwick branch. Thus far, the Bank has retained the majority of the deposits that were associated with that branch. The Company also spent $225,000 on marketing and advertising related to the PPP program during the June 2020 quarter. FDIC insurance expense increased to $605,000 in the September 2020 quarter from $455,000 in the June 2020 quarter and a credit of $277,000 in the September 2019 quarter.  The increase in FDIC expense in the September 2020 quarter was due to average asset growth, which negatively impacted some of the ratios used in calculating the quarterly assessment.

Mr. Kennedy noted, “During the fourth quarter of 2020, the Company will consolidate two of its private banking locations into existing offices which will result in future expense savings of approximately $200,000 on an annual basis. We continue to further evaluate office space and branch requirements.”

Income Taxes

The effective tax rate for the three months ended September 30, 2020 was 27.75%, as compared to 29.90% for the September 2019 quarter.  The slightly higher rate in the September 2019 quarter included higher NJ State Income Tax due to the change in NJ tax law.

During the first quarter of 2020, the Company recorded a $3.34 million tax benefit, principally due to a $3.2 million Federal income tax benefit that resulted from a tax NOL carryback. The Company had a $23 million operating loss for tax purposes in 2018 (when the Federal tax rate was 21%) resulting from accelerated tax depreciation. Under the CARES Act, the Company was allowed to carry this NOL back to a period when the Federal tax rate was 35%, generating a permanent tax benefit. 

Asset Quality / Provision for Loan and Lease Losses

For further details, see the Q3 2020 Investor Update (and Supplemental Financial Information).

Nonperforming assets at September 30, 2020 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $8.7 million, or 0.15% of total assets, down from $26.7 million, or 0.43% of total assets, at June 30, 2020 and $28.9 million, or 0.56% of total assets, at December 31, 2019.  The September 30, 2020 balance excludes one $10.0 million commercial loan classified as held for sale. Total loans past due 30 through 89 days and still accruing were $6.6 million at September 30, 2020 (of which $4.1 million made their past due payments in October), compared to $3.8 million at June 30, 2020 and $1.9 million at December 31, 2019.  During the third quarter of 2020, the Company’s asset recovery and workout efforts reduced nonperforming and classified assets.   

For the quarter ended September 30, 2020, the Company’s provision for loan and lease losses was $5.15 million compared to $4.90 million for the June 2020 quarter and $800,000 for the September 2019 quarter. The increased provision for loan and lease losses in the September and June 2020 quarters reflect the current environment created by the COVID-19 pandemic which led to increased qualitative loss factors when calculating the allowance for loan losses. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) also reflect, among other things, the Company’s assessment of asset quality metrics, net loan growth, net charge-offs/recoveries, and the composition of the loan portfolio.

At September 30, 2020, the allowance for loan and lease losses was $66.15 million (1.56% of total loans, excluding PPP loans), compared to $66.07 million at June 30, 2020 (1.52% of total loans), and $43.68 million at December 31, 2019 (0.99% of total loans). 

Capital

The Company’s capital position during the September 2020 quarter was benefitted by net income of $13.55 million.

The Company’s and Bank’s capital ratios at September 30, 2020 all remain strong.  Such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing run under multiple scenarios, including a no growth, severely adverse case. In such case as of June 30, 2020, the Bank remains well capitalized over a two-year stress period. With a Pandemic stress overlay on this case, the Bank still remains well capitalized over the two-year stress period. For further details, see the Q3 2020 Investor Update (and Supplemental Financial Information).

On October 27, 2020, the Company declared a cash dividend of $0.05 per share payable on November 25, 2020 to shareholders of record on November 10, 2020.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.0 billion and AUM/AUA administration of $7.6 billion as of September 30, 2020.  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 inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
• the impact of anticipated higher operating expenses in 2020 and beyond;
• our inability to successfully integrate wealth management firm acquisitions;
• our inability to manage our growth;
• our inability to successfully integrate our expanded employee base;
• an unexpected decline in the economy, in particular in our New Jersey and New York market areas;
• declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
• declines in value in our investment portfolio;
• impact on our business from a pandemic event on our business, operations, customers, allowance for loan losses and capital levels;
• higher than expected increases in our allowance for loan and lease losses;
• higher than expected increases in loan and lease losses or in the level of nonperforming loans;
• changes in interest rates;
• decline in real estate values within our market areas;
• legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
• successful cyberattacks against our IT infrastructure and that of our IT and third party providers;
• higher than expected FDIC insurance premiums;
• adverse weather conditions;
• our inability to successfully generate new business in new geographic markets;
• our inability to execute upon new business initiatives;
• our lack of liquidity to fund our various cash obligations;
• reduction in our lower-cost funding sources;
• our inability to adapt to technological changes;
• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
• our inability to retain key employees;
• demands for loans and deposits in our market areas;
• adverse changes in securities markets;
• changes in accounting policies and practices; and
• other unexpected material adverse changes in our operations or earnings.

             
Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and whether the gradual reopening of businesses will result in a meaningful increase in economic activity.  As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

• demand for our products and services may decline, making it difficult to grow assets and income;
• if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
• collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
• our allowance for loan losses may have to be increased if borrowers experience financial difficulties, which will adversely affect our net income;
• the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
• as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
• a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;
• our wealth management revenues may decline with continuing market turmoil;
• a worsening of business and economic conditions or in the financial markets could result in an impairment of certain intangible assets, such as goodwill;
• the unanticipated loss or unavailability of key employees due to the outbreak, which could harm our ability to operate our business or execute our business strategy, especially as we may not be successful in finding and integrating suitable successors;
• we may face litigation, regulatory enforcement and reputation risk as a result of our participation in the PPP and the risk that the SBA may not fund some or all PPP loan guaranties;
• our cyber security risks are increased as the result of an increase in the number of employees working remotely; and
• FDIC premiums may increase if the agency experience additional resolution costs.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2019.  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.

 (Tables to follow)

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

		For the Three Months Ended
		Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
		2020				2020				2020				2019				2019
Income Statement Data:
Interest income		$	40,174			$	41,649			$	45,395			$	45,556			$	45,948
Interest expense			8,025				9,678				13,648				14,642				15,863
Net interest income			32,149				31,971				31,747				30,914				30,085
Wealth management fee income			10,119				9,996				9,955				10,120				9,501
Service charges and fees			785				695				816				893				882
Bank owned life insurance			314				318				328				325				332
Gain on loans held for sale at fair value			954				550				292				344				198
(Mortgage banking) (A)
Gain/(loss) on loans held for sale at lower of cost or			7,429				—				(3	)			(4	)			(6	)
fair value(B)
Fee income related to loan level, back-to-back			—				202				1,418				2,459				2,349
swaps (A)
Gain on sale of SBA loans (A)			79				258				1,054				929				224
Other income			531				482				459				504				902
Securities gains/(losses), net			—				125				198				(45	)			34
Total other income			20,211				12,626				14,517				15,525				14,416
Salaries and employee benefits			19,202				19,186				19,226				17,954				17,476
Premises and equipment			4,109				4,036				4,043				3,898				3,849
FDIC insurance expense			605				455				250				—				(277	)
Other expenses			4,545				5,337				4,716				4,849				5,211
Total operating expenses			28,461				29,014				28,235				26,701				26,259
Pretax income before provision for loan losses			23,899				15,583				18,029				19,738				18,242
Provision for loan and lease losses (C)			5,150				4,900				20,000				1,950				800
Income/(loss) before income taxes			18,749				10,683				(1,971	)			17,788				17,442
Income tax expense/(benefit) (D)			5,202				2,441				(3,344	)			5,555				5,216
Net income		$	13,547			$	8,242			$	1,373			$	12,233			$	12,226
Total revenue (E)		$	52,360			$	44,597			$	46,264			$	46,439			$	44,501
Per Common Share Data:
Earnings per share (basic)		$	0.72			$	0.44			$	0.07			$	0.64			$	0.63
Earnings per share (diluted)			0.71				0.43				0.07				0.64				0.63
Weighted average number of common
shares outstanding:
Basic			18,908,337				18,872,070				18,858,343				18,966,917				19,314,666
Diluted			19,132,650				19,059,822				19,079,575				19,207,738				19,484,905
Performance Ratios:
Return on average assets annualized (ROAA)			0.89	%			0.56	%			0.11	%			0.98	%			1.00	%
Return on average equity annualized (ROAE)			10.53	%			6.56	%			1.08	%			9.81	%			9.87	%
Net interest margin (tax-equivalent basis)			2.20	%			2.27	%			2.57	%			2.60	%			2.60	%
GAAP efficiency ratio (F)			54.36	%			65.06	%			61.03	%			57.5	0%			59.01	%
Operating expenses / average assets annualized			1.86	%			1.97	%			2.18	%			2.13	%			2.16	%

1. Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.
2. Includes gain on sale of PPP loans of 355 million completed in the September quarter.
3. The March 2020, June 2020 and September 2020 quarter included a higher provision for loan and lease losses primarily due to the current environment created by the COVID-19 pandemic.
4. The March 2020 quarter included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the Federal tax rate was 14% higher.
5. Total revenue includes net interest income plus total other income.
6. Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.

             

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

		For the Nine Months Ended
		September 30,								Change
		2020				2019				$				%
Income Statement Data:
Interest income		$	127,218			$	135,114			$	(7,896	)			-6	%
Interest expense			31,351				45,754				(14,403	)			-31	%
Net interest income			95,867				89,360				6,507				7	%
Wealth management fee income			30,070				28,243				1,827				6	%
Service charges and fees			2,296				2,595				(299	)			-12	%
Bank owned life insurance			960				996				(36	)			-4	%
Gain on loans held for sale at fair value (Mortgage banking) (A)			1,796				377				1,419				376	%
Gain on loans held for sale at lower of cost or fair value (B)			7,426				(6	)			7,432				-123867	%
Fee income related to loan level, back-to-back swaps (A)			1,620				3,340				(1,720	)			-51	%
Gain on sale of SBA loans (A)			1,391				1,216				175				14	%
Other income			1,472				2,248				(776	)			-35	%
Securities gains/(losses), net			323				162				161				99	%
Total other income			47,354				39,171				8,183				21	%
Salaries and employee benefits			57,614				52,175				5,439				10	%
Premises and equipment			12,188				10,837				1,351				12	%
FDIC insurance expense			1,310				277				1,033				373	%
Other expenses			14,598				14,858				(260	)			-2	%
Total operating expenses			85,710				78,147				7,563				10	%
Pretax income before provision for loan losses			57,511				50,384				7,127				14	%
Provision for loan and lease losses (C)			30,050				2,050				28,000				1366	%
Income before income taxes			27,461				48,334				(20,873	)			-43	%
Income tax (benefit)/expense (D)			4,299				13,133				(8,834	)			-67	%
Net income		$	23,162			$	35,201			$	(12,039	)			-34	%
Total revenue (E)		$	143,221			$	128,531			$	14,690				11	%
Per Common Share Data:
Earnings per share (basic)		$	1.23			$	1.82			$	(0.59	)			-32	%
Earnings per share (diluted)			1.22				1.81				(0.59	)			-33	%
Weighted average number of common shares outstanding:
Basic			18,879,688				19,370,627				(490,939	)			-3	%
Diluted			19,052,605				19,496,721				(444,116	)			-2	%
Performance Ratios:
Return on average assets annualized (ROAA)			0.54	%			0.99	%			(0.45	)%			-46	%
Return on average equity annualized (ROAE)			6.07	%			9.67	%			(3.60	)%			-37	%
Net interest margin (tax-equivalent basis)			2.33	%			2.65	%			(0.32	)%			-12	%
GAAP efficiency ratio (F)			59.84	%			60.80	%			(0.95	)%			-2	%
Operating expenses / average assets annualized			1.99	%			2.21	%			(0.22	)%			-10	%

      (A)  Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.
      (B)  Includes gain on sale of PPP loans of $355 million completed in the September quarter.
      (C)  The increase in the provision for loan and lease losses in 2020 was primarily due to the current environment created by the COVID-19 pandemic.
      (D)   2020 year included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the Federal tax rate was 14% higher.
      (E)   Total revenue includes net interest income plus total other income.
      (F)  Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see 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,
		2020				2020				2020				2019				2019
ASSETS
Cash and due from banks		$	8,400			$	5,608			$	6,171			$	6,591			$	5,770
Federal funds sold			102				102				102				102				101
Interest-earning deposits			670,863				617,117				767,730				201,492				221,242
Total cash and cash equivalents			679,365				622,827				774,003				208,185				227,113
Securities available for sale			596,929				539,742				400,558				390,755				349,989
Equity security			15,159				15,159				14,034				10,836				7,881
FHLB and FRB stock, at cost			18,433				18,598				40,871				24,068				21,403
Residential mortgage			532,120				536,015				532,063				552,019				561,543
Multifamily mortgage			1,168,796				1,178,494				1,203,487				1,210,003				1,197,093
Commercial mortgage			722,678				761,910				760,648				761,244				721,261
Commercial loans (A)			1,930,984				2,316,125				1,810,214				1,776,450				1,575,076
Consumer loans			51,859				53,111				53,365				54,372				53,829
Home equity lines of credit			52,194				54,006				55,856				57,248				58,423
Other loans			260				272				347				349				380
Total loans			4,458,891				4,899,933				4,415,980				4,411,685				4,167,605
Less: Allowances for loan and lease losses			66,145				66,065				63,783				43,676				41,580
Net loans			4,392,746				4,833,868				4,352,197				4,368,009				4,126,025
Premises and equipment			21,668				21,449				21,243				20,913				20,898
Other real estate owned			50				50				50				50				336
Accrued interest receivable			22,192				15,956				11,816				10,494				11,759
Bank owned life insurance			46,645				46,479				46,309				46,128				45,940
Goodwill and other intangible assets			39,622				39,943				40,265				40,588				41,111
Finance lease right-of-use assets			4,517				4,704				4,891				5,078				5,265
Operating lease right-of-use assets			10,011				10,810				11,553				12,132				10,328
Other assets (B)			110,770				111,630				113,668				45,643				57,361
TOTAL ASSETS		$	5,958,107			$	6,281,215			$	5,831,458			$	5,182,879			$	4,925,409
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	838,307			$	911,989			$	581,085			$	529,281			$	544,464
Interest-bearing demand deposits			1,858,529				1,804,102				1,680,452				1,510,363				1,352,471
Savings			127,737				123,140				112,668				112,652				115,448
Money market accounts			1,251,349				1,183,603				1,163,410				1,196,313				1,196,188
Certificates of deposit – Retail			586,801				629,941				651,000				633,763				583,425
Certificates of deposit – Listing Service			32,677				35,327				38,895				47,430				55,664
Subtotal “customer” deposits			4,695,400				4,688,102				4,227,510				4,029,802				3,847,660
IB Demand – Brokered			130,000				130,000				180,000				180,000				180,000
Certificates of deposit – Brokered			33,750				33,736				33,723				33,709				33,696
Total deposits			4,859,150				4,851,838				4,441,233				4,243,511				4,061,356
Short-term borrowings			15,000				15,000				515,000				128,100				67,000
FHLB advances			105,000				105,000				105,000				105,000				105,000
Paycheck Protection Program Liquidity Facility (C)			183,790				535,837				—				—				—
Finance lease liability			6,976				7,196				7,402				7,598				7,793
Operating lease liability			10,318				11,116				11,852				12,423				10,619
Subordinated debt, net			83,585				83,529				83,473				83,417				83,361
Other liabilities (B)			156,472				163,719				160,173				91,227				94,930
Due to brokers			15,088				—				10,885				7,951				—
TOTAL LIABILITIES			5,435,379				5,773,235				5,335,018				4,679,227				4,430,059
Shareholders’ equity			522,728				507,980				496,440				503,652				495,350
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	5,958,107			$	6,281,215			$	5,831,458			$	5,182,879			$	4,925,409
Assets under management and / or administration at		$	7.6			$	7.2			$	6.4			$	7.5			$	7.0
Peapack-Gladstone Bank’s Private Wealth Management
Division (market value, not included above-dollars in billions)

(A)     Includes PPP loans of $202 million at September 30, 2020 and $547 million at June 30, 2020.
(B)    The increase in other assets and other liabilities at March 31, 2020, June 30, 2020 and September 30, 2020 was primarily due to the change in the fair value of our back-to-back swap program.
(C)     Represents funding provided by the Federal Reserve for pledged PPP loans at June 30, 2020 and September 30, 2020.

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

As of

Sept 30,

June 30,

March 31,

Dec 31,

Sept 30,

2020

2020

Peapack-Gladstone Financial Corp NASDAQ:PGC PGC Rankings #3168 Ranked by Market Cap #1869 Ranked by Dividends PGC Latest News Apr 23, 2024 Peapack-Gladstone Financial Corporation Reports First Quarter Results Apr 22, 2024 Greg Tamberlane Joins Peapack Private as Senior Vice President, Head of Commercial Bank Operations New York Apr 19, 2024 Peapack-Gladstone Bank Promotes Kate Sant'Angelo to Senior Vice President, Director of Personal Banking Apr 8, 2024 Peapack Private Announces New York City Expansion Apr 2, 2024 Peapack Private Hires Joanne Gagliardi, Senior Managing Director PGC Stock Data Market Cap 407.98M Float 14.71M Insiders Ownership 11.53% Institutions Ownership 74.54% Short Percent 3.31% Industry Commercial Banking Sector Finance and Insurance Website Link Country United States of America City BEDMINSTER About PGC member fdic - equal housing lender founded in 1921, peapack-gladstone bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers which help them to establish, maintain and expand their legacy. through its private banking locations in bedminster, morristown, princeton and teaneck, its wealth management* and commercial private banking divisions, and its retail private banking network and online platforms, peapack-gladstone bank has proven to be a high performing boutique bank, leaders in wealth, lending and deposit solutions, known nationally for unparalleled client service, integrity and trust. *non-deposit investment products are not insured by the fdic; are not deposits or other obligations of, or guaranteed by, peapack-gladstone bank; and are subject to investment risks, including possible loss of the principal amount invested. Explore About Rhea-AI Sitemap Legal Terms of Use Cookie Notice Privacy Policy Links RSS feed Patreon Discord Server Facebook Reddit © 2020-2024 StockTitan.net