Peapack-Gladstone Financial Corporation Reports Fourth Quarter and Full Year Results and Announces a 5% Stock Repurchase Program

BEDMINSTER, NJ, Feb. 01, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter and full year 2020 results. 

This earnings release should be read in conjunction with the Company’s Q4 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 $189.36 million, net income of $26.19 million and diluted earnings per share (“EPS”) of $1.37 for the year ended December 31, 2020, compared to $174.97 million, $47.43 million and $2.44, respectively, for the year ended December 31, 2019. 

The main driver of the decrease in net income and EPS for the 2020 twelve-month period was a $32.40 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 $32.40 million compared to a $4.00 million provision for the 2019 twelve-month period.   

The 2020 twelve-month period included increased net interest income and noninterest income. The increase in net interest income was due principally to earnings from the Paycheck Protection Program (“PPP”). The increase in noninterest income also benefitted from gain on sale of PPP loans and increases in wealth management income (primarily due to the acquisition of Point View Wealth Management acquired in September 2019) and mortgage banking income. These increases were partially offset by increased operating expenses (due in part to the previous mentioned firm acquired in September 2019, prepayment of FHLB advances, valuation allowance for a loan held for sale, the closure of one retail branch and consolidation of two private banking locations). 

The 2020 twelve-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.   

For the quarter ended December 31, 2020, the Company recorded total revenue of $46.14 million, net income of $3.03 million and EPS of $0.16, compared to $46.44 million, $12.23 million and $0.64, respectively, for the same three-month period last year. 

The 2020 quarter included increased net interest income, due in part to earnings from the PPP, but also due to increased other interest-earnings assets.  Noninterest income also increased due to increases in wealth management income and mortgage banking income.  These increases were partially offset by increased operating expenses (due in part to the previous mentioned prepayment of FHLB advances ($4.78 million), valuation allowance for loan held for sale ($4.43 million) and consolidation of two private banking offices ($210,000), and an increase in the provision for loan and lease losses to $2.35 million due to the current environment created by the COVID-19 pandemic, compared to a $1.95 million provision for loan and lease losses for the 2019 quarter.   

On January 28, 2021, the Company authorized the repurchase of up to 948,735 shares, or approximately 5% of its outstanding shares, through March 31, 2022. Purchases will be conducted in accordance with the limitations set forth in the SEC’s Rule 10b-18.  

Douglas L. Kennedy, President and CEO, said, “Our capital is strong and believe that purchasing our Company’s stock is an opportunity for us to effectively manage our excess capital, while taking advantage of the Company’s discounted valuation relative to peers.”

Mr. Kennedy also said, “As noted in previous quarters, during 2020 we generally 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. As of December 31, 2020, our deferrals were $74 million (or 1.7% of the loan portfolio).” 

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 Q4 2020 Investor Update (and Supplemental Financial Information). 

EXECUTIVE SUMMARY:

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


Year over Year Comparison

  Year Ended  Year Ended          
  December 31,  December 31,   Increase/ 
(Dollars in millions, except per share data) 2020  2019   (Decrease) 
Net interest income $127.60  $120.27   $7.33   6%
Wealth management fee income (A)  40.86   38.36    2.50   7 
Capital markets activity (B)  6.65   8.67    (2.02)  (23)
Other income (C)  14.25   7.67    6.58   86 
Total other income  61.76   54.70    7.06   13 
Operating expenses (D)  124.96   104.85    20.11   19 
Pretax income before provision for loan losses  64.40   70.12    (5.72)  (8)
Provision for loan and lease losses (E)  32.40   4.00    28.40   710 
Pretax income  32.00   66.12    (34.12)  (52)
Income tax expense (F)  5.81   18.69    (12.88)  (69)
Net income $26.19  $47.43   $(21.24)  (45)%
Diluted EPS $1.37  $2.44   $(1.07)  (44)%
                  
Total Revenue $189.36  $174.97   $14.39   8%
                  
Return on average assets annualized  0.45%  0.99%   (0.54)    
Return on average equity annualized  5.11%  9.70%   (4.59)    


  1. The twelve months ended December 31, 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. There were $1.6 million of fees related to loan level back-to-back swap activities in 2020 period, compared to $5.8 million in 2019.  
  3. The twelve months ended December 31, 2020 includes a gain on sale of $7.4 million on the sale of $355 million of PPP loans.
  4. The twelve months ended December 31, 2020 includes a full year of operating expenses related to Point View, $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, $210,000 for the consolidation of two private banking locations, $278,000 for the closure of a retail branch, and an increase in FDIC premium expense due to credits applied in 2019 available to the banking industry but unavailable in general. 
  5. The twelve months ended December 31, 2020 included a provision for loan and lease losses of $32.40 million, which was primarily due to the current environment created by the COVID-19 pandemic. 
  6. 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.


December 2020 Quarter Compared to Prior Year Quarter


  Three Months Ended   Three Months Ended         
  December 31,   December 31,  Increase/ 
(Dollars in millions, except per share data) 2020   2019  (Decrease) 
Net interest income $31.74   $30.91  $0.83   3%
Wealth management fee income  10.79    10.12   0.67   7 
Capital markets activity (A)  1.85    3.73   (1.88)  (50)
Other income  1.76    1.68   0.08   5 
Total other income  14.40    15.53   (1.13)  (7)
Operating expenses (B)  39.25    26.70   12.55   47 
Pretax income before provision for loan losses  6.89    19.74   (12.85)  (65)
Provision for loan and lease losses (C)  2.35    1.95   0.40   21 
Pretax income  4.54    17.79   (13.25)  (74)
Income tax expense  1.51    5.56   (4.05)  (73)
Net income $3.03   $12.23  $(9.20)  (75)%
Diluted EPS $0.16   $0.64  $(0.48)  (76)%
                  
Total Revenue $46.14   $46.44  $(0.30)  (1)%
                  
Return on average assets annualized  0.21%   0.98%  (0.77)    
Return on average equity annualized  2.32%   9.81%  (7.49)    
  1. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, and mortgage banking activities. There were no fees related to loan level back-to-back swap activities in the quarter ended December 31, 2020, compared to $2.5 million in the December 2019 quarter.  
  2. The quarter ended December 31, 2020 includes $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, $210,000 for the consolidation of two private banking locations, and an increase in FDIC premium expense due to credits applied in the 2019 period that were available to the banking industry in general.
  3. The December 2020 quarter included a provision for loan and lease losses of $2.35 million.


December 2020 Quarter Compared to Linked Quarter

  Three Months Ended  Three Months Ended          
  December 31,  September 30,   Increase/ 
(Dollars in millions, except per share data) 2020  2020   (Decrease) 
Net interest income $31.74  $32.15   $(0.41)  (1)%
Wealth management fee income  10.79   10.12    0.67   7 
Capital markets activity (A)  1.85   1.03    0.82   80 
Other income (B)  1.76   9.06    (7.30)  (81)
Total other income  14.40   20.21    (5.81)  (29)
Operating expenses (C)  39.25   28.46    10.79   38 
Pretax income before provision for loan losses  6.89   23.90    (17.01)  (71)
Provision for loan and lease losses (D)  2.35   5.15    (2.80)  (54)
Pretax (loss)/income  4.54   18.75    (14.21)  (76)
Income tax expense  1.51   5.20    (3.69)  (71)
Net income $3.03  $13.55   $(10.52)  (78)%
Diluted EPS $0.16  $0.71   $(0.55)  (77)%
                  
Total Revenue $46.14  $52.36   $(6.22)  (12)%
                  
Return on average assets annualized  0.21%  0.89%   (0.68)    
Return on average equity annualized  2.32%  10.53%   (8.21)    


  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.
  3. The quarter ended December 31, 2020 includes $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale and $210,000 for the consolidation of two private banking locations.
  4. The provision for loan and lease losses for the three months ended December 31, 2020 was less than the provision for the three months ended September 30, 2020 as certain qualitative factors related to COVID-19 pandemic were partially reduced.  

The Company’s near-term priorities include:

  • Actively deploy/manage capital and liquidity by expanding our lending activities and execution on our recently announced stock repurchase program. 
  • Grow and expand our core wealth management and commercial banking businesses, including lift-outs, strategic hires, and acquisition of wealth management firms. 
  • Expand our net interest margin. 
  • Continue to assess the economic recovery; modify our allowance for credit losses as justified given the economic environment. 
  • Invest in digital enhancements to improve the client acquisition and experience.
  • Grow fee income to 35% to 45% of total bank revenue. 

Other select highlights for the quarter included:

  • As previously announced, in the fourth quarter of 2020 the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. The proceeds raised will be used for general corporate purposes, which will include stock repurchases and could potentially include redemption of the Company’s existing 6% subordinated debt and acquisitions of wealth management firms.   
  • As previously announced, the Company repaid $105 million of FHLB advances at a cost of $4.8 million, which will provide a benefit to interest expense greater than the prepayment penalty over the remaining life of the advances.
  • As previously announced, effective in December 2020 the Company completed its lift out of teams from Lucas Capital Management, a registered investment advisor headquartered in Red Bank, NJ, which added nearly $250 million of assets under management and/or administration (“AUM/AUA”) and Noyes Capital Management, a registered investment advisor headquartered in New Vernon, NJ, which added approximately $150 million of AUM/AUA.
  • The Company recorded $210,000 of charges related to the consolidation of two private banking locations.   The Company expects to recoup the charges in less than a year.
  • Wealth management fee income, which comprised approximately 22% of the Company’s total revenue for the twelve-months ended December 31, 2020, continues to contribute significantly to the Company’s diversified revenue sources. 
  • As of December 31, 2020, total C&I loans (including PPP and loans held for sale) comprised 45% of the total loan portfolio.  
  • Deposits totaled $4.82 billion at December 31, 2020.  This reflected net growth of $575 million or 14% compared to $4.24 billion at December 31, 2019.  
  • The Company’s reported and core net interest margin improved in the quarter when compared to the September 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 December 31, 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 December 31, 2020 remain strong and the Company’s tangible book value per share at December 31, 2020 was $25.47 (compared to a book value of $27.78), reflecting an increase of over 4% from $24.47 (compared to a book value of $26.61) at December 31, 2019, despite a much higher than normal provision for loan and lease losses during 2020 ($32.4 million in 2020 compared to $4.0 million in 2019).  
  • Nonperforming assets at December 31, 2020 were $11.5 million, or 0.19% of total assets. Loans past due 30 to 89 days total $5.1 million at December 31, 2020.     

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management Business

In the December 2020 quarter, the Bank’s wealth management business generated $10.79 million in fee income, compared to $10.12 million for the December 2019 quarter, and $10.12 million for the September 2020 quarter. 

The market value of the Company’s AUM/AUA increased from $7.6 billion at September 30, 2020 to a record $8.8 billion at December 31, 2020. 

In the December 2020 quarter the Company completed the lift out of teams from Lucas Capital Management and Noyes Capital Management which combined added approximately $400 million in AUM/AUA.

John P. Babcock, President of the Peapack Private Wealth Management division, said “2020 new business, new client acquisition and client retention were all strong and aided by favorable market action in the second half of the year, most notably in the quarter ended December 31, 2020.  2020 full year gross inflows totaled over $600 million”. Babcock went on to note, “We continue to look to grow our wealth business organically and through selective acquisition.  At year-end 2020, we combined two of our acquired RIAs – Lassus Wherley Associates and Point View Wealth Management into the Peapack Private bank entity and we continue to make significant progress on our infrastructure consolidation including launching our new trading platform and a new CRM system, as well as adding more resources to our financial planning team.”

Loans / Commercial Banking 

Total loans of $4.40 billion at December 31, 2020 (including PPP loans of $196 million) were relatively flat when compared to the December 31, 2019 balance, and declined $54 million from $4.46 billion at September 30, 2020, as paydown and payoff activity remains robust. Excluding PPP loan originations of $596 million, 2020 origination levels of approximately $885 million were less than 2019’s level of $1.3 billion, due to the impact of the COVID-19 pandemic in 2020. 

Total C&I loans (including $196 million of PPP loans) at December 31, 2020 were $1.98 billion.  This reflected net growth of $199 million when compared to $1.78 billion at December 31, 2019.  Excluding the $196 million of PPP loans at December 31, 2020, total C&I loans remained relatively flat in 2020 despite paydowns of several large lines of credit, as well as the Company’s workout and asset recovery efforts, including the workout and recovery of several nonaccrual and/or classified credits during the latter part of 2020. 

Although the Bank sold $355 million of PPP loans in the third quarter of 2020 (at a gain of $7.4 million), as of December 31, 2020, the Bank still held $196 million of PPP loans (almost all of which exceed $2.0 million in original principal amount) with approximately $1.2 million of net deferred fees which will be recognized into income over the remaining portion of the original two-year maturity of the loan or as forgiven or repaid. 

The Company maintains a well-diversified loan portfolio, by loan type and by industry concentration, as detailed in the Q4 2020 Investor Update (and Supplemental Financial Information).

Mr. Kennedy noted, “Our commercial pipelines going into the new year are strong. Further, and as I noted in prior periods, our Corporate Advisory business, which gives us the capability to engage in high level strategic debt, capital and valuation analysis, enables us to provide a unique boutique level of service, giving us a competitive advantage over many 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 December 31, 2020 were $4.82 billion reflecting an increase of $575 million when compared to $4.24 billion at December 31, 2019. Noninterest bearing demand deposits increased $304 million, interest bearing demand increased $339 million, brokered deposits declined $70 million, and higher costing CDs declined $119 million.  Mr. Kennedy noted, “Of our total deposits, only 17% are not covered by FDIC insurance, reinforcing the “core” nature of our deposit base.”

For the quarter ended December 31, 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 $1.8 billion of secured funding available from the Federal Home Loan Bank. Additionally, the Company also had $988 million of secured funding available from the Federal Reserve Discount Window. As noted previously, during the fourth quarter of 2020, the Bank prepaid $105 million of FHLB advances with an average rate in excess of 3%. 

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 the first quarter of 2020 reduced the Company’s yield earned on assets. However, we were able and continue to strategically reprice our deposits over time to offset much of that decline. Further, when interest rate rise, our net interest income will improve. Our current modeling indicates that net interest income would improve 8.5% with an immediate 100 basis points rise in rates.” 

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


 Twelve Months Ended  Twelve Months Ended         
 December 31, 2020  December 31, 2019         
 NII  NIM  NII  NIM         
                        
NII/NIM excluding the below$123,099  2.58%  $119,032  2.67%         
Prepayment premiums received on loan paydowns 1,452  0.02%   1,328  0.03%         
Effect of maintaining excess interest earning cash (1,320) -0.21%   (86) -0.07%         
Effect of PPP loans 4,371  -0.08%     0.00%         
NII/NIM as reported$127,602  2.31%  $120,274  2.63%         
                        
 Three Months Ended  Three Months Ended  Three Months Ended 
 December 31, 2020  September 30, 2020  December 31, 2019 
 NII  NIM  NII  NIM  NII  NIM 
                        
NII/NIM excluding the below$30,897  2.51%  $30,327  2.45%  $30,385  2.61% 
Prepayment premiums received on loan paydowns 413  0.02%   104  0.01%   414  0.03% 
Effect of maintaining excess interest earning cash (206) -0.24%   (266) -0.24%   115  -0.04% 
Effect of PPP loans 631  -0.04%   1,984  -0.02%     0.00% 
NII/NIM as reported$31,735  2.25%  $32,149  2.20%  $30,914  2.60% 


As shown above, the Company’s reported NIM increased 5 basis points compared to the linked quarter, while core NIM increased 6 basis points compared to the linked quarter. The Bank was able to strategically price down its cost of funds by 7 basis points during the December 2020 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 $460 million of CDs with an average rate of approximately 1.18% 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 $1.85 million for the December 2020 quarter compared to $1.03 million for the September 2020 quarter and $3.73 million for the December 2019 quarter.  The December 2020 and September 2020 quarters 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, as there has been, and will continue to be, minimal activity for such in the current environment.  

Operating Expenses

The Company’s total operating expenses were $39.25 million for the quarter ended December 31, 2020, compared to $28.46 million for the September 2020 quarter and $26.70 million for the December 2019 quarter.  The December 2020 quarter included the prepayment of FHLB advances ($4.8 million), a valuation allowance on a loan held for sale ($4.4 million) and consolidation of two private banking offices ($210,000).  FDIC insurance expense increased to $665,000 in the December 2020 quarter from $605,000 in the September 2020 quarter and the Company recorded none in the December 2019 quarter.  The increase in FDIC expense in 2020 quarter was due to average asset growth. There was no FDIC insurance expense in the December 2019 quarter due to credits applied which were available to the banking industry in general. The 2020 periods also included reduced deferral of expenses directly related to loan originations when compared to 2019 periods, due to reduced 2020 loan origination levels as a result of the impact of the COVID-19 pandemic.   

Mr. Kennedy noted, “While we continue to manage expenses closely and prudently, we will invest in digital enhancements to improve the client experience and grow and expand our core wealth management and commercial banking businesses, including lift-outs, strategic hires, and wealth M&A.”

Income Taxes

The effective tax rate for the three months ended December 31, 2020 was 33.29%, as compared to 27.75% for the September 2020 quarter and 31.23% for the December 2019 quarter. A tax return to book adjustment recorded in the December 2020 quarter, coupled with reduced pretax income in the that quarter, increased the December 2020 effective tax rate by approximately 5%.     

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 Q4 2020 Investor Update (and Supplemental Financial Information).

Nonperforming assets at December 31, 2020 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $11.5 million, or 0.19% of total assets, up slightly from $8.7 million, or 0.15% of total assets, at September 30, 2020 and down significantly from $28.9 million, or 0.56% of total assets, at December 31, 2019.  Total loans past due 30 through 89 days and still accruing were $5.1 million at December 31, 2020 (of which $4.7 million made their past due payments in January), compared to $6.6 million at September 30, 2020 and $1.9 million at December 31, 2019.  During the third and fourth quarter of 2020, the Company’s asset recovery and workout efforts reduced nonperforming and classified assets.    

For the quarter ended December 31, 2020, the Company’s provision for loan and lease losses was $2.35 million compared to $5.15 million for the September 2020 quarter and $1.95 million for the December 2019 quarter. The increased provision for loan and lease losses in the 2020 quarters when compared to the 2019 quarter 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 decline, net charge-offs/recoveries, and the composition of the loan portfolio. 

At December 31, 2020, the allowance for loan and lease losses was $67.31 million (1.53% of total loans), compared to $66.15 million at September 30, 2020 (1.48% of total loans), and $43.68 million at December 31, 2019 (0.99% of total loans).  

The Company plans to adopt CECL effective January 1, 2021 and does not expect its Day One CECL adjustment to be material. 

Capital 

The Company’s capital position during the December 2020 quarter was benefitted by net income of $3.03 million.

The Company’s and Bank’s capital ratios at December 31, 2020 all remain strong.  Such ratios remain well above regulatory well capitalized standards.

As previously noted, and as previously announced, in the fourth quarter of 2020 the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. Such funds benefitted the Company’s Regulatory Tier 2 Capital. The proceeds raised will be used for general corporate purposes, which will include stock repurchases and could potentially include redemption of the Company’s existing 6% subordinated debt and acquisitions of wealth management firms. 

The Company employs quarterly capital stress testing run under multiple scenarios, including a no growth, severely adverse case. In such case as of September 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 Q4 2020 Investor Update (and Supplemental Financial Information)

As previously announced on January 28, 2021, the Company declared a cash dividend of $0.05 per share payable on February 26, 2021 to shareholders of record on February 11, 2021.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $5.9 billion and AUM/AUA administration of $8.8 billion as of December 31, 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 2021 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 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2020  2020  2020  2020  2019 
Income Statement Data:                    
Interest income $38,532  $40,174  $41,649  $45,395  $45,556 
Interest expense  6,797   8,025   9,678   13,648   14,642 
Net interest income  31,735   32,149   31,971   31,747   30,914 
Wealth management fee income  10,791   10,119   9,996   9,955   10,120 
Service charges and fees  859   785   695   816   893 
Bank owned life insurance  313   314   318   328   325 
Gain on loans held for sale at fair value
   (Mortgage banking) (A)
  1,470   954   550   292   344 
Gain/(loss) on loans held for sale at lower of cost or
   fair value (B)
     7,429      (3)  (4)
Fee income related to loan level, back-to-back
   swaps (A)
        202   1,418   2,459 
Gain on sale of SBA loans (A)  375   79   258   1,054   929 
Other income  640   531   482   459   504 
Securities gains/(losses), net  (42)     125   198   (45)
Total other income  14,406   20,211   12,626   14,517   15,525 
Salaries and employee benefits  19,902   19,202   19,186   19,226   17,954 
Premises and equipment  4,189   4,109   4,036   4,043   3,898 
FDIC insurance expense  665   605   455   250    
FHLB prepayment penalty  4,784             
Valuation allowance loans held for sale (C)  4,425             
Other expenses  5,284   4,545   5,337   4,716   4,849 
Total operating expenses  39,249   28,461   29,014   28,235   26,701 
Pretax income before provision for loan losses  6,892   23,899   15,583   18,029   19,738 
Provision for loan and lease losses (D)  2,350   5,150   4,900   20,000   1,950 
Income/(loss) before income taxes  4,542   18,749   10,683   (1,971)  17,788 
Income tax expense/(benefit) (E)  1,512   5,202   2,441   (3,344)  5,555 
Net income $3,030  $13,547  $8,242  $1,373  $12,233 
                     
Total revenue (F) $46,141  $52,360  $44,597  $46,264  $46,439 
Per Common Share Data:                    
Earnings per share (basic) $0.16  $0.72  $0.44  $0.07  $0.64 
Earnings per share (diluted)  0.16   0.71   0.43   0.07   0.64 
Weighted average number of common
   shares outstanding:
                    
Basic  18,947,864   18,908,337   18,872,070   18,858,343   18,966,917 
Diluted  19,334,569   19,132,650   19,059,822   19,079,575   19,207,738 
Performance Ratios:                    
Return on average assets annualized (ROAA)  0.21%  0.89%  0.56%  0.11%  0.98%
Return on average equity annualized (ROAE)  2.32%  10.53%  6.56%  1.08%  9.81%
Net interest margin (tax-equivalent basis)  2.25%  2.20%  2.27%  2.57%  2.60%
GAAP efficiency ratio (F)  85.06%  54.36%  65.06%  61.03%  57.50%
Operating expenses / average assets annualized  2.66%  1.86%  1.97%  2.18%  2.13%


  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 December 2020 quarter reflects a $4.4 million write-down of a commercial real estate loan associated with an assisted living facility.
  4. The March 2020, June 2020 and September 2020 quarters included a higher provision for loan and lease losses primarily due to the environment created by the COVID-19 pandemic.
  5. 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.
  6. Total revenue includes net interest income plus total other income.
  7. 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 Twelve Months Ended         
  December 31,  Change 
  2020  2019  $  % 
Income Statement Data:                
Interest income $165,750  $180,670  $(14,920)  -8%
Interest expense  38,148   60,396   (22,248)  -37%
Net interest income  127,602   120,274   7,328   6%
Wealth management fee income  40,861   38,363   2,498   7%
Service charges and fees  3,155   3,488   (333)  -10%
Bank owned life insurance  1,273   1,321   (48)  -4%
Gain on loans held for sale at fair value (Mortgage banking) (A)  3,266   721   2,545   353%
Gain/(loss) on loans held for sale at lower of cost or
   fair value (B)
  7,426   (10)  7,436   -74360%
Fee income related to loan level, back-to-back swaps (A)  1,620   5,799   (4,179)  -72%
Gain on sale of SBA loans (A)  1,766   2,145   (379)  -18%
Other income  2,112   2,752   (640)  -23%
Securities gains/(losses), net  281   117   164   140%
Total other income  61,760   54,696   7,064   13%
Salaries and employee benefits  77,516   70,129   7,387   11%
Premises and equipment  16,377   14,735   1,642   11%
FDIC insurance expense  1,975   277   1,698   613%
FHLB prepayment penalty  4,784      4,784  N/A 
Valuation allowance loans held for sale (C)  4,425      4,425  N/A 
Other expenses  19,882   19,707   175   1%
Total operating expenses  124,959   104,848   20,111   19%
Pretax income before provision for loan losses  64,403   70,122   (5,719)  -8%
Provision for loan and lease losses (D)  32,400   4,000   28,400   710%
Income before income taxes  32,003   66,122   (34,119)  -52%
Income tax (benefit)/expense (E)  5,811   18,688   (12,877)  -69%
Net income $26,192  $47,434  $(21,242)  -45%
                 
Total revenue (F) $189,362  $174,970  $14,392   8%
Per Common Share Data:                
Earnings per share (basic) $1.39  $2.46  $(1.07)  -43%
Earnings per share (diluted)  1.37   2.44   (1.07)  -44%
Weighted average number of common shares outstanding:                
Basic  18,896,825   19,268,870   (372,045)  -2%
Diluted  19,081,187   19,411,448   (330,261)  -2%
Performance Ratios:                
Return on average assets annualized (ROAA)  0.45%  0.99%  (0.54)%  -54%
Return on average equity annualized (ROAE)  5.11%  9.70%  (4.59)%  -47%
Net interest margin (tax-equivalent basis)  2.31%  2.63%  (0.32)%  -12%
GAAP efficiency ratio (F)  65.99%  59.92%  6.07%  10%
Operating expenses / average assets annualized  2.16%  2.19%  (0.03)%  -1%


  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 2020 quarter.
  3. The 2020 year reflects a $4.4 million write down of a commercial real estate loan associated with an assisted living facility.
  4. The increase in the provision for loan and lease losses in 2020 was primarily due to the environment created by the COVID-19 pandemic. 
  5. 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.
  6. Total revenue includes net interest income plus total other income.
  7. 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 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2020  2020  2020  2020  2019 
ASSETS                    
Cash and due from banks $10,629  $8,400  $5,608  $6,171  $6,591 
Federal funds sold  102   102   102   102   102 
Interest-earning deposits  642,591   670,863   617,117   767,730   201,492 
Total cash and cash equivalents  653,322   679,365   622,827   774,003   208,185 
Securities available for sale  622,689   596,929   539,742   400,558   390,755 
Equity security  15,117   15,159   15,159   14,034   10,836 
FHLB and FRB stock, at cost  13,709   18,433   18,598   40,871   24,068 
Residential mortgage  520,188   532,120   536,015   532,063   552,019 
Multifamily mortgage  1,127,198   1,168,796   1,178,494   1,203,487   1,210,003 
Commercial mortgage  694,034   722,678   761,910   760,648   761,244 
Commercial loans (A)  1,975,337   1,930,984   2,316,125   1,810,214   1,776,450 
Consumer loans  37,016   51,859   53,111   53,365   54,372 
Home equity lines of credit  50,547   52,194   54,006   55,856   57,248 
Other loans  225   260   272   347   349 
Total loans  4,404,545   4,458,891   4,899,933   4,415,980   4,411,685 
Less: Allowances for loan and lease losses  67,309   66,145   66,065   63,783   43,676 
Net loans  4,337,236   4,392,746   4,833,868   4,352,197   4,368,009 
Premises and equipment  21,609   21,668   21,449   21,243   20,913 
Other real estate owned  50   50   50   50   50 
Accrued interest receivable  22,495   22,192   15,956   11,816   10,494 
Bank owned life insurance  46,809   46,645   46,479   46,309   46,128 
Goodwill and other intangible assets  43,891   39,622   39,943   40,265   40,588 
Finance lease right-of-use assets  4,330   4,517   4,704   4,891   5,078 
Operating lease right-of-use assets  9,421   10,011   10,810   11,553   12,132 
Other assets (B)  99,764   110,770   111,630   113,668   45,643 
TOTAL ASSETS $5,890,442  $5,958,107  $6,281,215  $5,831,458  $5,182,879 
                     
LIABILITIES                    
Deposits:                    
Noninterest-bearing demand deposits $833,500  $838,307  $911,989  $581,085  $529,281 
Interest-bearing demand deposits  1,849,254   1,858,529   1,804,102   1,680,452   1,510,363 
Savings  130,731   127,737   123,140   112,668   112,652 
Money market accounts  1,298,885   1,251,349   1,183,603   1,163,410   1,196,313 
Certificates of deposit – Retail  530,222   586,801   629,941   651,000   633,763 
Certificates of deposit – Listing Service  32,128   32,677   35,327   38,895   47,430 
Subtotal “customer” deposits  4,674,720   4,695,400   4,688,102   4,227,510   4,029,802 
IB Demand – Brokered  110,000   130,000   130,000   180,000   180,000 
Certificates of deposit – Brokered  33,764   33,750   33,736   33,723   33,709 
Total deposits  4,818,484   4,859,150   4,851,838   4,441,233   4,243,511 
Short-term borrowings  15,000   15,000   15,000   515,000   128,100 
FHLB advances (C)     105,000   105,000   105,000   105,000 
Paycheck Protection Program Liquidity Facility (D)  177,086   183,790   535,837       
Finance lease liability  6,753   6,976   7,196   7,402   7,598 
Operating lease liability  9,737   10,318   11,116   11,852   12,423 
Subordinated debt, net (E)  181,794   83,585   83,529   83,473   83,417 
Other liabilities (B)  154,466   156,472   163,719   160,173   91,227 
Due to brokers     15,088      10,885   7,951 
TOTAL LIABILITIES  5,363,320   5,435,379   5,773,235   5,335,018   4,679,227 
Shareholders’ equity  527,122   522,728   507,980   496,440   503,652 
TOTAL LIABILITIES AND                    
SHAREHOLDERS’ EQUITY $5,890,442  $5,958,107  $6,281,215  $5,831,458  $5,182,879 
Assets under management and / or administration at
   Peapack-Gladstone Bank’s Private Wealth Management
   Division (market value, not included above-dollars in billions)
 $8.8  $7.6  $7.2  $6.4  $7.5 


  1. Includes PPP loans of $196 million at December 31, 2020, $202 million at September 30, 2020 and $547 million at June 30, 2020.
  2. The increase in other assets and other liabilities at March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020 was primarily due to the change in the fair value of our back-to-back swap program.
  3. The Company prepaid $105 million of FHLB Advances with a weighted-average rate of 3.20% during the December 2020 quarter.
  4. Represents funding provided by the Federal Reserve for pledged PPP loans.
  5. The increase was due to the completion of a $100 million subordinated debt offering in December 22, 2020.


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

  As of 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2020  2020  2020  2020  2019 
Asset Quality:                    
Loans past due over 90 days and still accruing $  $  $  $  $ 
Nonaccrual loans (A)  11,410   8,611   26,697   29,324   28,881 
Other real estate owned  50   50   50   50   50 
Total nonperforming assets $11,460  $8,661  $26,747  $29,374  $28,931 
                     
Nonperforming loans to total loans  0.26%  0.19%  0.54%  0.66%  0.65%
Nonperforming assets to total assets  0.19%  0.15%  0.43%  0.50%  0.56%
                     
Performing TDRs (B)(C) $201  $2,278  $2,376  $2,389  $2,357 
                     
Loans past due 30 through 89 days and still accruing (D)(E) $5,053  $6,609  $3,785  $8,261  $1,910 
                     
Loans subject to special mention $162,103  $129,700  $27,922  $13,222  $13,643 
                     
Classified loans $37,771  $41,263  $63,562  $58,938  $58,908 
                     
Impaired loans $16,204  $15,514  $33,708  $36,369  $35,924 
                     
Allowance for loan and lease losses:                    
Beginning of period $66,145  $66,065  $63,783  $43,676  $41,580 
Provision for loan and lease losses  2,350   5,150   4,900   20,000   1,950 
(Charge-offs)/recoveries, net  (1,186)  (5,070)  (2,618)  107   146 
End of period $67,309  $66,145  $66,065  $63,783  $43,676 
                     
ALLL to nonperforming loans  589.91%  768.15%  247.46%  217.51%  151.23%
ALLL to total loans (F)  1.53%  1.48%  1.35%  1.44%  0.99%
General ALLL to total loans (G)  1.47%  1.48%  1.26%  1.30%  0.93%


  1. Excludes residential and commercial loans held for sale of $8.5 million at December 31, 2020.  Excludes one commercial loan held for sale of $10.0 million at September 30, 2020.
  2. Amounts reflect TDRs that are paying according to restructured terms.
  3. Amount does not include $4.0 million at December 31, 2020, $5.2 million at September 30, 2020, $23.2 million at June 30, 2020, $25.9 million at March 31, 2020 and $25.8 million at December 31, 2019 of TDRs included in nonaccrual loans.
  4. Excludes a residential loan held for sale of $93,000 at December 31, 2020.
  5. December 31, 2020 includes $1.3 million of residential loans that are classified as delinquent due to an escrow payment shortage due to a recent change in escrow payment requirement.
  6. If PPP loans of $196 million were excluded from loans at December 31, 2020, the ALLL/loans ratio would be 1.61%; if PPP loans of $202 million were excluded from loans at September 30, 2020, ALLL/ loans ratio would be 1.56%; and if PPP loans of $547 million were excluded from loans at June 30, 2020, ALLL/loans ratio would be 1.52%.
  7. Total ALLL less specific reserves equals general ALLL.


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

  December 31,  September 30,  December 31, 
  2020  2020  2019 
Capital Adequacy                  
Equity to total assets (A)(J)    8.95%    8.77%    9.72%
Tangible Equity to tangible assets (B)    8.27%    8.16%    9.01%
Tangible Equity to tangible assets excluding
   PPP loans (C)
    8.55%    8.45%    9.01%
Book value per share (D)   $27.78    $27.62    $26.61 
Tangible Book Value per share (E)   $25.47    $25.53    $24.47 


  December 31,  September 30,  December 31, 
  2020  2020  2019 
Regulatory Capital – Holding Company                        
Tier I leverage $483,535  8.53%  $483,782  8.54%  $463,521  9.33% 
Tier I capital to risk-weighted assets  483,535   11.93   483,782   11.76   463,521   11.14 
Common equity tier I capital ratio
   to risk-weighted assets
  483,500   11.93   483,747   11.75   463,520   11.14 
Tier I & II capital to risk-weighted assets  716,210   17.67   618,993   15.04   590,614   14.20 
                         
Regulatory Capital – Bank                        
Tier I leverage (F) $549,575  9.71%  $547,761  9.68%  $527,833  10.63% 
Tier I capital to risk-weighted assets (G)  549,575   13.55   547,761   13.33   527,833   12.70 
Common equity tier I capital ratio
   to risk-weighted assets (H)
  549,540   13.55   547,726   13.33   527,832   12.70 
Tier I & II capital to risk-weighted assets (I)  600,478   14.81   599,314   14.58   571,509   13.76 


  1. Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
  2. Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end.  See Non-GAAP financial measures reconciliation included in these tables.
  3. Tangible equity and tangible assets excluding PPP loans are calculated by excluding the balance of intangible assets from shareholders’ equity and excluding the balance of intangible assets and PPP loans from total assets. Tangible equity as a percentage of tangible assets excluding PPP loans at period end is calculated by dividing tangible equity by tangible assets excluding PPP loans at period end.  See Non-GAAP financial measures reconciliation included in these tables.
  4. Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding
  5. Tangible book value per excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding.  See Non-GAAP financial measures reconciliation tables.
  6. Regulatory well capitalized standard = 5.00% ($283 million)
  7. Regulatory well capitalized standard = 8.00% ($324 million)
  8. Regulatory well capitalized standard = 6.50% ($264 million)
  9. Regulatory well capitalized standard = 10.00% ($406 million)
  10. PPP loans with a balance of $196 million and $202 million increased total assets at December 31, 2020 and September 30, 2020, respectively.  Equity to total assets would be 9.26% and 9.08% if PPP loans were excluded from total assets at December 31, 2020 and September 30, 2020, respectively.


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

  For the Quarters Ended 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2020  2020  2020  2020  2019 
Residential loans retained $22,316  $32,599  $18,627  $14,831  $17,115 
Residential loans sold  64,630   54,521   37,061   19,391   21,255 
Total residential loans  86,946   87,120   55,688   34,222   38,370 
Commercial real estate     1,613   748   8,858   52,630 
Multifamily  1,184   1,500   11,960   61,998   63,627 
Commercial (C&I) loans (A) (B)  218,235   118,048   99,294   42,908   174,946 
SBA (C)  8,355   4,962   595,651   13,830   19,195 
Wealth lines of credit (A)  3,925   2,000   500   3,250   42,575 
Total commercial loans  231,699   128,123   708,153   130,844   352,973 
Installment loans  690   253   950   256   984 
Home equity lines of credit (A)  2,330   4,759   4,280   3,632   2,414 
Total loans closed $321,665  $220,255  $769,071  $168,954  $394,741 


  For the Twelve Months Ended 
  Dec 31,  Dec 31, 
  2020  2019 
Residential loans retained $88,373  $69,025 
Residential loans sold  175,603   49,976 
Total residential loans  263,976   119,001 
Commercial real estate  11,219   151,273 
Multifamily  76,642   220,491 
Commercial (C&I) loans (A) (B)  478,485   688,921 
SBA (C)  622,798   35,495 
Wealth lines of credit (A)  9,675   63,660 
Total commercial loans  1,198,819   1,159,840 
Installment loans  2,149   3,401 
Home equity lines of credit (A)  15,001   13,278 
Total loans closed $1,479,945  $1,295,520 


  1. Includes loans and lines of credit that closed in the period but not necessarily funded.
  2. Includes equipment finance.
  3. Includes PPP loans of $596 million for the three months ended June 30, 2020 and for the twelve months ended December 31, 2020.


PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

  December 31, 2020  December 31, 2019 
  Average  Income/      Average  Income/     
  Balance  Expense  Yield  Balance  Expense  Yield 
ASSETS:                        
Interest-earning assets:                        
Investments:                        
Taxable (A) $636,417  $2,033   1.28% $393,549  $2,428   2.47%
Tax-exempt (A) (B)  8,137   101   4.96   12,037   147   4.88 
                         
Loans (B) (C):                        
Mortgages  520,123   4,372   3.36   557,132   4,780   3.43 
Commercial mortgages  1,865,953   14,796   3.17   1,959,902   18,588   3.79 
Commercial  1,943,855   16,587   3.41   1,662,026   18,413   4.43 
Commercial construction  10,376   108   4.16   4,842.00   81.00   6.69 
Installment  44,581   320   2.87   54,562   524   3.84 
Home equity  51,545   429   3.33   58,082   662   4.56 
Other  281   6   8.54   379   10   10.55 
Total loans  4,436,714   36,618   3.30   4,296,925   43,058   4.01 
Federal funds sold  102      0.25   102      0.25 
Interest-earning deposits  614,024   148   0.10   159,759   560   1.40 
Total interest-earning assets  5,695,394   38,900   2.73%  4,862,372   46,193   3.80%
Noninterest-earning assets:                        
Cash and due from banks  9,632           5,600         
Allowance for loan and lease losses  (68,862)          (42,374)        
Premises and equipment  21,698           20,946         
Other assets  238,856           166,868         
Total noninterest-earning assets  201,324           151,040         
Total assets $5,896,718          $5,013,412         
                         
LIABILITIES:                        
Interest-bearing deposits:                        
Checking $1,850,917  $1,059   0.23% $1,407,151  $3,489   0.99%
Money markets  1,273,681   811   0.25   1,169,413   3,456   1.18 
Savings  128,195   17   0.05   112,597   16   0.06 
Certificates of deposit – retail  602,068   2,106   1.40   660,159   3,734   2.26 
Subtotal interest-bearing deposits  3,854,861   3,993   0.41   3,349,320   10,695   1.28 
Interest-bearing demand – brokered  113,696   514   1.81   180,000   981   2.18 
Certificates of deposit – brokered  33,756   267   3.16   33,702   267   3.17 
Total interest-bearing deposits  4,002,313   4,774   0.48   3,563,022   11,943   1.34 
Borrowings  244,753   616   1.01   221,462   1,383   2.50 
Capital lease obligation  6,832   82   4.80   7,669   92   4.80 
Subordinated debt  94,437   1,325   5.61   83,385   1,224   5.87 
Total interest-bearing liabilities  4,348,335   6,797   0.63%  3,875,538   14,642   1.51%
Noninterest-bearing liabilities:                        
Demand deposits  858,004           539,501         
Accrued expenses and other liabilities  166,933           99,702         
Total noninterest-bearing liabilities  1,024,937           639,203         
Shareholders’ equity  523,446           498,671         
Total liabilities and shareholders’ equity $5,896,718          $5,013,412         
Net interest income     $32,103          $31,551     
Net interest spread          2.10%          2.29%
Net interest margin (D)          2.25%          2.60%


  1. Average balances for available for sale securities are based on amortized cost.
  2. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
  3. Loans are stated net of unearned income and include nonaccrual loans.
  4. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.


PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

  December 31, 2020  September 30, 20020 
  Average  Income/      Average  Income/     
  Balance  Expense  Yield  Balance  Expense  Yield 
ASSETS:                        
Interest-earning assets:                        
Investments:                        
Taxable (A) $636,417  $2,033   1.28% $553,607  $2,182   1.58%
Tax-exempt (A) (B)  8,137   101   4.96   9,127   116   5.08 
                         
Loans (B) (C):                        
Mortgages  520,123   4,372   3.36   529,500   4,437   3.35 
Commercial mortgages  1,865,953   14,796   3.17   1,929,319   15,115   3.13 
Commercial  1,943,855   16,587   3.41   2,134,399   17,653   3.31 
Commercial construction  10,376   108   4.16   4,395   55   5.01 
Installment  44,581   320   2.87   52,659   377   2.86 
Home equity  51,545   429   3.33   53,373   444   3.33 
Other  281   6   8.54   283   7   9.89 
Total loans  4,436,714   36,618   3.30   4,703,928   38,088   3.24 
Federal funds sold  102      0.25   102      0.25 
Interest-earning deposits  614,024   148   0.10   652,832   159   0.10 
Total interest-earning assets  5,695,394   38,900   2.73%  5,919,596   40,545   2.74%
Noninterest-earning assets:                        
Cash and due from banks  9,632           7,479         
Allowance for loan and lease losses  (68,862)          (68,110)        
Premises and equipment  21,698           21,511         
Other assets  238,856           242,017         
Total noninterest-earning assets  201,324           202,897         
Total assets $5,896,718          $6,122,493         
                         
LIABILITIES:                        
Interest-bearing deposits:                        
Checking $1,850,917  $1,059   0.23% $1,828,780  $1,130   0.25%
Money markets  1,273,681   811   0.25   1,235,040   920   0.30 
Savings  128,195   17   0.05   125,016   16   0.05 
Certificates of deposit – retail  602,068   2,106   1.40   642,732   2,529   1.57 
Subtotal interest-bearing deposits  3,854,861   3,993   0.41   3,831,568   4,595   0.48 
Interest-bearing demand – brokered  113,696   514   1.81   130,000   636   1.96 
Certificates of deposit – brokered  33,756   267   3.16   33,742   267   3.17 
Total interest-bearing deposits  4,002,313   4,774   0.48   3,995,310   5,498   0.55 
Borrowings  244,753   616   1.01   475,465   1,221   1.03 
Capital lease obligation  6,832   82   4.80   7,054   84   4.76 
Subordinated debt  94,437   1,325   5.61   83,552   1,222   5.85 
Total interest-bearing liabilities  4,348,335   6,797   0.63%  4,561,381   8,025   0.70%
Noninterest-bearing liabilities:                        
Demand deposits  858,004           872,560         
Accrued expenses and other liabilities  166,933           173,816         
Total noninterest-bearing liabilities  1,024,937           1,046,376         
Shareholders’ equity  523,446           514,736         
Total liabilities and shareholders’ equity $5,896,718          $6,122,493         
Net interest income     $32,103          $32,520     
Net interest spread          2.10%          2.04%
Net interest margin (D)          2.25%          2.20%


  1. Average balances for available for sale securities are based on amortized cost.
  2. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate. 
  3. Loans are stated net of unearned income and include nonaccrual loans.
  4. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.



PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
TWELVE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

  December 31, 2020  December 31, 2019 
  Average  Income/      Average  Income/     
  Balance  Expense  Yield  Balance  Expense  Yield 
ASSETS:                        
Interest-earning assets:                        
Investments:                        
Taxable (A) $510,245  $8,782   1.72% $391,666  $10,228   2.61%
Tax-exempt (A) (B)  9,479   477   5.03   14,930   728   4.88 
                         
Loans (B) (C):                        
Mortgages  528,687   17,882   3.38   565,935   19,321   3.41 
Commercial mortgages  1,958,262   64,541   3.30   1,857,014   72,061   3.88 
Commercial  1,969,115   71,037   3.61   1,498,077   71,071   4.74 
Commercial construction  5,932   295   4.97   1,881   132   7 
Installment  51,007   1,532   3.00   54,555   2,246   4.12 
Home equity  53,853   1,940   3.60   60,036   2,981   4.97 
Other  311   29   9.32   391   42   10.74 
Total loans  4,567,167   157,256   3.44   4,037,889   167,854   4.16 
Federal funds sold  102      0.25   102      0.25 
Interest-earning deposits  504,753   968   0.19   223,629   4,457   1.99 
Total interest-earning assets  5,591,746   167,483   3.00%  4,668,216   183,267   3.93%
Noninterest-earning assets:                        
Cash and due from banks  7,025           5,477         
Allowance for loan and lease losses  (61,401)          (40,328)        
Premises and equipment  21,455           21,176         
Other assets  219,287           142,156         
Total noninterest-earning assets  186,366           128,481         
Total assets $5,778,112          $4,796,697         
                         
LIABILITIES:                        
Interest-bearing deposits:                        
Checking $1,742,846  $7,279   0.42% $1,342,901  $15,789   1.18%
Money markets  1,227,295   6,185   0.50   1,189,880   16,434   1.38 
Savings  120,780   63   0.05   113,312   63   0.06 
Certificates of deposit – retail  654,652   11,476   1.75   631,999   14,210   2.25 
Subtotal interest-bearing deposits  3,745,573   25,003   0.67   3,278,092   46,496   1.42 
Interest-bearing demand – brokered  143,388   2,773   1.93   180,000   3,457   1.92 
Certificates of deposit – brokered  33,735   1,061   3.15   42,460   1,225   2.89 
Total interest-bearing deposits  3,922,696   28,837   0.74   3,500,552   51,178   1.46 
Borrowings  308,814   3,976   1.29   136,992   3,941   2.88 
Capital lease obligation  7,157   343   4.79   7,956   382   4.80 
Subordinated debt  86,246   4,992   5.79   83,300   4,895   5.88 
Total interest-bearing liabilities  4,324,913   38,148   0.88%  3,728,800   60,396   1.62%
Noninterest-bearing liabilities:                        
Demand deposits  787,191           505,486         
Accrued expenses and other liabilities  153,648           73,601         
Total noninterest-bearing liabilities  940,839           579,087         
Shareholders’ equity  512,360           488,810         
Total liabilities and shareholders’ equity $5,778,112          $4,796,697         
Net interest income     $129,335          $122,871     
Net interest spread          2.12%          2.31%
Net interest margin (D)          2.31%          2.63%


  1. Average balances for available for sale securities are based on amortized cost.
  2. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate. 
  3. Loans are stated net of unearned income and include nonaccrual loans.
  4. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.


PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts.  We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively.  We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding.  We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end.  We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue.  We calculate the efficiency ratio by dividing total noninterest expenses, excluding ORE provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue.  We believe that this provides one reasonable measure of core expenses relative to core revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios.  Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures.  As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies.  A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

  Three Months Ended 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
Tangible Book Value Per Share 2020  2020  2020  2020  2019 
Shareholders’ equity $527,122  $522,728  $507,980  $496,440  $503,652 
Less:  Intangible assets, net  43,891   39,622   39,943   40,265   40,588 
Tangible equity  483,231   483,106   468,037   456,175   463,064 
                     
Period end shares outstanding  18,974,703   18,924,953   18,905,135   18,852,523   18,926,810 
Tangible book value per share $25.47  $25.53  $24.76  $24.20  $24.47 
Book value per share  27.78   27.62   26.87   26.33   26.61 
                     
Tangible Equity to Tangible Assets                    
Total assets $5,890,442  $5,958,107  $6,281,215  $5,831,458  $5,182,879 
Less: Intangible assets, net  43,891   39,622   39,943   40,265   40,588 
Tangible assets  5,846,551   5,918,485   6,241,272   5,791,193   5,142,291 
Less: PPP Loans  195,574   201,991   547,004       
Tangible Assets excluding PPP Loans  5,650,977   5,716,494   5,694,268   5,791,193   5,142,291 
Tangible equity to tangible assets  8.27%  8.16%  7.50%  7.88%  9.01%
Tangible equity to tangible assets excluding PPP loans  8.55%  8.45%  8.22%  7.88%  9.01%
Equity to assets (A)  8.95%  8.77%  8.09%  8.51%  9.72%


  1. Equity to total assets would be 9.26% if PPP loans of $196 million were excluded from total assets as of December 31, 2020. Equity to total assets would be 9.08% if PPP loans of $202 million were excluded from total assets as of September 30, 2020. Equity to total assets would be 8.86% if PPP loans of $547 million were excluded from total assets as of June 30, 2020.


  Three Months Ended 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
Efficiency Ratio 2020  2020  2020  2020  2019 
Net interest income $31,735  $32,149  $31,971  $31,747  $30,914 
Total other income  14,406   20,211   12,626   14,517   15,525 
Less:                    
  (Gain)/loss on loans held for sale                    
    at lower of cost or fair value     (7,429)     3   4 
  Securities losses/(gains), net  42      (125)  (198)  45 
Total recurring revenue  46,183   44,931   44,472   46,069   46,488 
                     
Operating expenses  39,249   28,461   29,014   28,235   26,701 
Less:                    
  FHLB prepayment penalty  4,784             
  Valuation allowance loans held for sale  4,425             
Total operating expense  30,040   28,461   29,014   28,235   26,701 
                     
Efficiency ratio  65.05%  63.34%  65.24%  61.29%  57.44%


  For the Twelve Months Ended 
  Dec 31,  Dec 31, 
Efficiency Ratio 2020  2019 
Net interest income $127,602  $120,274 
Total other income  61,760   54,696 
Less:        
  Securities (gains)/losses, net  (281)  (117)
  (Gain)/loss on loans held for sale        
    at lower of cost or fair value  (7,426)  10 
Total recurring revenue  181,655   174,863 
         
Operating expenses  124,959   104,848 
Less:        
  FHLB prepayment penalty  4,784    
  Valuation allowance loans held for sale  4,425    
Total operating expense  115,750   104,848 
         
Efficiency ratio  63.72%  59.96%


Contact:
Jeffrey J. Carfora, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308



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