CST: 25/05/2016 06:00:21   

Peapack-Gladstone Financial Corporation Reports Another Strong Quarter and Year of Record Results

113 Days ago

BEDMINSTER, NJ--(Marketwired - Feb 1, 2016) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded record net income of $19.97 million and diluted earnings per share of $1.29 for the year ended December 31, 2015, compared to $14.89 million and $1.22, respectively, for the same twelve month period last year, reflecting increases of $5.08 million or 34 percent and $0.07 per share or 6 percent, respectively. 

For the quarter ended December 31, 2015, the Corporation recorded net income of $4.34 million and diluted earnings per share of $0.28, compared to $4.21 million and diluted earnings per share of $0.32 for the same three month period last year.

During the fourth quarter of 2015 the Company recorded $2.5 million of charges related to the closure of two branch offices, as previously announced. These charges reduced pretax income by $2.5 million, net income by $1.6 million, and earnings per share by approximately $0.10 per share, for both the year and the quarter. Doug Kennedy, President and CEO, said, "We anticipate that we will retain the majority of deposits associated with these two branches and we expect expense saves that will recoup the $2.5 million charge in approximately three years."

The following table summarizes specified financial measures for the year ended:

                   
(Dollars in millions, except EPS)   December
2015 (A)
    December
2014
    Increase/
(Decrease)
 
Net interest income   $ 84.45     $ 67.89     $ 16.56     24 %
Provision for loan losses   $ 7.10     $ 4.88     $ 2.23     46 %
Pretax income   $ 32.14     $ 24.29     $ 7.85     32 %
Net income   $ 19.97     $ 14.89     $ 5.08     34 %
Diluted EPS   $ 1.29     $ 1.22     $ 0.07     6 %
Total revenue   $ 108.17     $ 88.70     $ 19.47     22 %
                               
Return on average assets     0.64 %     0.63 %     0.01        
Return on average equity     7.71 %     7.96 %     (0.25 )      
Efficiency ratio (B)     63.80 %     67.45 %     (3.65 )      
Book value per share   $ 17.61     $ 16.36     $ 1.25     8 %
 
(A) The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices, as previously announced. These charges reduced pretax income by $2.5 million, net income by $1.6 million, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B) See Non-GAAP financial measures reconciliation table on page 26.
   

Mr. Kennedy said, "We had a very strong 2015, as we continued to successfully execute on our Growth Strategy - Expanding Our Reach."

2015 highlights follow:

  • Earnings for 2015 reflected improvement when compared to 2014's results (as reflected just above). Year over year growth in diluted EPS was 6 percent, despite 2.776 million common shares issued in the December 2014 capital raise and incurring $2.5 million ($0.10 per share) of operating expense related to branch closures. Excluding the branch closure expenses, EPS would have increased 14 percent.
  • At December 31, 2015, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank ("the Bank") was $3.32 billion, including the acquisition of Wealth Management Consultants, which occurred in May 2015. Year over year growth in AUA totaled 11 percent for 2015.
  • Fee income from the Private Wealth Management Division totaled $17.0 million for 2015, growing from $15.2 million for 2014. Year over year growth in wealth management fee income was 12 percent, despite a relatively flat stock market in 2015.
  • Loans at December 31, 2015 totaled $3.0 billion. This reflected growth of $745 million, net of participations sold, when compared to $2.3 billion at December 31, 2014. Year over year net loan growth was 33 percent.
  • Multifamily loan participations sold in 2015 totaled approximately $200 million. 
  • Commercial & Industrial (C&I) loans at December 31, 2015 totaled $513 million. This reflected growth of $204 million when compared to the $309 million at December 31, 2014. Year over year C&I loan growth was 66 percent.
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) grew $663 million to $2.64 billion at December 31, 2015 from $1.98 billion at December 31, 2014. Year over year customer deposit growth totaled 33 percent.
  • Asset quality metrics continued to be strong at December 31, 2015. Nonperforming assets at December 31, 2015 were just $7.3 million or 0.22 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $2.1 million at December 31, 2015.
  • The Company's net interest income for 2015 was $84.5 million. This reflected improvement when compared to $67.9 million for 2014. Year over year growth in net interest income was 24 percent.
  • The Company continued to leverage the capital raised in the fourth quarter of 2014. The Company believes it has sufficient common equity to support its continued growth and expansion for the immediate future.
  • The book value per share at December 31, 2015 of $17.61 reflected improvement when compared to $16.36 at December 31, 2014. Year over year growth in book value per share totaled 8 percent.

Mr. Kennedy noted, "We are very pleased with our accomplishments in 2015, and we remain on track with our strategy. We do, however, see some headwinds in the near term, which is more fully described under 'Wealth Management Business' and 'Operating Expenses' later in this release. Despite these headwinds, we remain confident that our strategy will continue to deliver solid gains in shareholder value."

Net Interest Income / Net Interest Margin

Net interest income and net interest margin was $22.82 million and 2.79 percent for the fourth quarter of 2015, compared to $21.71 million and 2.75 percent for the third quarter of 2015, and compared to $18.35 million and 2.89 percent for the same quarter last year, reflecting growth in net interest income of $4.47 million or 24 percent when compared to the prior year period. Net interest income for the fourth quarter of 2015 benefitted from significant loan growth during the twelve months of 2015. Additionally, the 2015 quarter included approximately $321 thousand of prepayment premiums received on the prepayment of certain multifamily loans. This income benefitted the net interest margin for the quarter by 4 basis points.

While net interest income for the fourth quarter of 2015 improved considerably compared to the same quarter in 2014, the net interest margin declined to 2.79 percent for the 2015 quarter from 2.89 percent for the 2014 quarter. Net interest margin continued to be impacted by the effect of the low interest rate environment throughout 2015, as well as competitive pressures in attracting new loans and deposits.

Net interest margin is also affected by the maintenance of larger average interest earning deposit/cash balances. The Company has maintained greater liquidity on its balance sheet to support its expansive loan program. Mr. Kennedy said, "As I have said before, given our rapid growth, we had decided to maintain and will continue to maintain higher liquidity on our balance sheet than typically needed for operations." Mr. Kennedy went on to note, "In addition to liquidity from cash equivalents and investment securities on our balance sheet, we also have close to $1 billion of net secured funding available from the Federal Home Loan Bank, of which we only have $124 million drawn as of December 31, 2015."

Wealth Management Business

In the December 2015 quarter, Peapack-Gladstone Bank's wealth management business generated $4.31 million in fee income compared to $4.17 million for the September 2015 quarter, and $3.82 million for the December 2014 quarter.  

For the year ended December 31, 2015, Peapack-Gladstone Bank's wealth management business generated $17.04 million in fee income compared to $15.24 million for the year ended December 31, 2014, reflecting an increase of $1.80 million or 12 percent.

Growth in fee income was due to many factors including: the acquisition of Wealth Management Consultants, LLC ("WMC") which closed in May 2015, which contributed approximately half of the year-over-year fee increase; continued healthy new business results; higher yields on new business as compared to lost/closed business; and the conversion of lower fee custody relationships to higher fee advisory relationships. These contributions to increased revenue were partially offset by the broader market declines in the second half of 2015, which negatively impacted investment fee revenue. The market value of the assets under administration (AUA) of the wealth management division was $3.32 billion at December 31, 2015, compared to $3.25 billion at September 30, 2015 and up $335 million or 11 percent from $2.99 billion at December 31, 2014.

Mr. Babcock, President of Private Wealth Management, said, "We continue to incorporate wealth into every conversation we have with all of the Company's clients, across all business lines. We have expanded our wealth management team and will continue to grow our team and expand the products, services, and advice we deliver to our clients." Mr. Babcock went on to note, "We believe the headwinds created by the recent and continuing correction in the financial markets will impact revenue in the near term. However, we continue to remain optimistic about the market in the medium-to-longer term and we believe this, coupled with our continued strong new business and new client acquisitions, will lead to improved results over time and will be a significant driver to enhancing shareholder value as our business continues to grow."

Loan Originations / Loans

At December 31, 2015, loans totaled $3.00 billion compared to $2.86 billion three months ago at September 30, 2015 and compared to $2.25 billion one year ago at December 31, 2014, representing net increases of $140 million or 5 percent sequentially and $745 million or 33 percent, year over year.

Total loan originations were $1.35 billion for the year ended December 31, 2015, up $273 million or 25 percent when compared to $1.07 billion for the same twelve month period in 2014. For the fourth quarter ended December 31, 2015 loan originations were $292 million, about flat to the September 2015 quarter, and down slightly from $302 million for the December 2014 quarter.

For the quarter ended December 31, 2015, residential mortgage originations totaled $26 million. In 2015 we successfully repositioned our residential mortgage business to serve as a lead product for new wealth business, as well as support for other relationships. We believe that volumes will increase going forward.

The December 2015 quarter included $108 million of multifamily loan originations, down from $150 million in the September 2015 quarter, and down significantly from the quarters prior to September 2015. The December 2015 quarter also included C&I loan originations of $75 million, in line with the average of the prior four quarters.

At December 31, 2015, the multifamily loan portfolio totaled $1.50 billion compared to $1.44 billion three months ago at September 30, 2015 and compared to $1.08 billion one year ago at December 31, 2014, representing net increases of $55 million or 4 percent sequentially and $419 million or 39 percent, year over year. The increases were net of participations sold, including approximately $70 million of participations sold in the current December 2015 quarter, and approximately $200 million for the twelve months ended December 31, 2015. These participations were part of the Company's balance sheet management strategy and will likely continue in 2016 and beyond.

The commercial mortgage loan portfolio grew by $14 million from September 30, 2015 to December 31, 2015, reflecting linked quarter growth of 3 percent, and grew by $105 million from December 31, 2014 to December 31, 2015, reflecting year over year growth of 34 percent.

The net increases in both the multifamily and commercial mortgage portfolios were attributable to: the addition of seasoned banking professionals; continued attention to the client service aspect of the lending process; an expansion of New Jersey and Pennsylvania-based real estate marketing activities; and a focus on the Boroughs of New York City multifamily markets beginning in mid-2013. The increase was also due to demand from borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.

Mr. Kennedy said, "As I explained over the last two quarters, we anticipated multifamily loan originations and growth would be less than past quarters, as we manage our balance sheet such that the C&I loan portfolio becomes a larger percentage of our overall loan portfolio. Our C&I pipeline remains robust and we believe we will continue to deliver strong growth."

For the year ended December 31, 2015 the Company closed $289 million of commercial loans. When comparing December 31, 2015 to December 31, 2014, commercial loans grew $204 million or 66 percent, to $513 million at December 31, 2015 from $309 million one year ago at December 31, 2014. At December 31, 2015 the commercial loan portfolio comprised 17 percent of the overall loan portfolio, up from 14 percent one year ago at December 31, 2014.

Mr. Kennedy said, "As a result of our investment in and commitment to C&I banking, including the addition in 2014 and 2015 of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in February 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow and consume a larger percentage of our overall loan portfolio. However, due to the nature of this business, this growth will likely not be linear each quarter, but rather will be apparent over longer periods of time."

Mr. Kennedy went on to say, "Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received. The ability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enables us to provide a unique boutique level of service to business owners and middle market clients."

Deposits / Funding / Balance Sheet Management

Net asset growth of $96 million and decreased brokered (overnight) interest-bearing deposits of $43 million in the December 2015 quarter were principally funded by customer deposit growth of $91 million, increased overnight borrowings of $41 million, and increased capital of $9 million.

Although brokered interest-bearing demand ("overnight") deposits decreased $43 million to $200 million at December 31, 2015, these deposits continue to be maintained as an additional source of liquidity. The interest rate paid on these deposits allows the Bank to fund at attractive rates and engage in interest rate swaps to hedge its asset-liability interest rate risk. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

From a liquidity/funding perspective, such brokered deposits, at a direct cost of approximately 51 basis points (excluding costs of hedging), are generally a more cost effective alternative than borrowings which require pledged collateral when drawn, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits enables their use in swap transactions for an efficient hedging/interest rate risk management program. As of December 31, 2015, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount.

Certificates of deposit have also been utilized more extensively in 2015. The majority of these deposits have been longer term and have generally been transacted as part of the Company's interest rate risk management. These certificates of deposit are also a more cost effective alternative than wholesale borrowings of similar duration. 

Mr. Kennedy noted, "The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management solutions will help support both core deposit growth and commercial lending opportunities."

Other Noninterest Income

Service charges and fees for the December 2015 quarter were $849 thousand, compared to $832 thousand for the September 2015 quarter and $880 thousand for the December 2014 quarter. Several categories have reflected improvement, including income from debit card usage as well as account analysis fees, however, overdraft/NSF fees have declined considerably.

The December 2015 quarter included $117 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $102 thousand for the September 2015 quarter, and $128 thousand in the 2014 quarter. 

There were no securities gains for the December 2015 quarter compared to $83 thousand for the September 2015 quarter, and $44 thousand for the December 2014 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the duration of our investment portfolio and the interest rate environment, as well as the future outlook, we anticipate such sales will continue to be a very small component of the Company's operations.

Other income of $198 thousand for the December 2015 quarter compared to $164 thousand for the September quarter, and $142 thousand for the December 2014 quarter. The improvement in the current quarter is principally due to improved loan servicing fees related to continued multifamily loan participations, as well as higher unused line of credit fees associated with the C&I lending business.  

Operating Expenses 
The Company's total operating expenses were $19.99 million for the quarter ended December 31, 2015. During the quarter the Company recorded $2.5 million of charges related to the closure of two branch offices. Excluding these expenses total expenses for the December 2015 quarter would have been $17.50 million, compared to $16.90 million for the September 2015 quarter, and $15.58 million in the same 2014 quarter. The increased total operating expenses were generally in line with the Company's Strategic Plan.

Salary and benefits expense for the December 2015 quarter were $10.66 million compared to $10.32 million for the September 2015 quarter, and $9.19 million for the same quarter last year. Strategic hiring that was in line with the Company's Plan, the acquisition of WMC, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the December 2014 quarter to the December 2015 quarter. Premises and equipment expense totaled $3.39 million for the quarter ended December 31, 2015, compared to $2.79 million for the September 2015 quarter, and $2.63 million for the same quarter last year. The December 2015 quarter included $722 thousand related to the branch closures.

Other expenses for the December 2015 quarter were $5.12 million, compared to $3.38 million for the September quarter and $3.31 million for the December 2014 quarter. The December 2015 quarter included $1.73 million related to the branch closures.

Mr. Kennedy noted, "Expenses over the past year have continued to track to our Plan." Mr. Kennedy went on to note, "Given our significant growth and high concentration in multifamily lending, Management has decided to accelerate approximately $2.0 million of infrastructure investment over the next 3 to 12 months to ensure we adhere to best in class risk management practices. We had originally planned for such expenditures over the next 24 to 30 months, but we feel it is prudent to pull them forward. Further we generally expect an approximate $950 thousand increase in our quarterly FDIC premium going forward (approximately $3.8 million for 2016). While we believe approximately $5.0 million of our increased costs in 2016 will be temporary, we cannot predict when the additional FDIC premium will be eliminated."

INCOME TAX EXPENSE

The effective tax rate (income taxes divided by pretax income) for the fourth quarter of 2015 was lower than prior quarterly periods. The effective tax rate for the year ended December 31, 2015 was 37.86 percent compared to 38.69 percent for the year ended December 31, 2014. During the fourth quarter of 2015, several new subsidiaries of the bank became active reducing the effective State tax rate.

Provision for Loan Losses / Asset Quality

For the quarter ended December 31, 2015, the Company's provision for loan losses was $1.95 million, compared to $1.25 million for the December 2014 quarter. Charge-offs, net of recoveries, for the fourth quarter of 2015 was only $468 thousand. The larger provision in 2015 was due to loan growth, as well as greater qualitative factor allocations of the allowance to C&I and Commercial Real Estate loans.

At December 31, 2015 the allowance for loan losses was $25.86 million, 383 percent of nonperforming loans and 0.86 percent of total loans, compared to $24.37 million, 320 percent of nonperforming loans, and 0.85 percent of total loans at September 30, 2015, and $19.48 million, 284 percent of nonperforming loans and 0.87 percent of total loans one year prior, at December 31, 2014.

The Company's provision for loan losses and its allowance for loan losses continue to track consistently with the Company's net loan growth and asset quality metrics.

Nonperforming assets at December 31, 2015 were just $7.3 million or 0.22 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $2.1 million at December 31, 2015. There were no multifamily loans past due at year end.

Capital / Dividends

The Company's capital position in the December 2015 quarter was benefitted by net income of $4.3 million and also by $5.5 million of voluntary share purchases in the Dividend Reinvestment Plan, which continue to be a source of capital for the company.

At December 31, 2015, the Company's GAAP capital as a percent of total assets was 8.19 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.10 percent, 10.42 percent, 10.42 percent and 11.40 percent, respectively. The Company's regulatory capital ratios are all above the respective 5 percent, 6.5 percent, 8 percent, and 10 percent levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced on January 28, 2016, the Board of Directors declared a regular cash dividend of $0.05 per share payable on February 25, 2016 to shareholders of record on February 11, 2016.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.36 billion as of December 31, 2015. 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 division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

The foregoing contains 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

  • 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 2016 and beyond;
  • inability to manage our growth;
  • inability to successfully integrate our expanded employee base;
  • a continued or 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 low interest rate environment and highly competitive market;
  • declines in value in our investment portfolio
  • higher than expected increases in our allowance for loan losses;
  • higher than expected increases in loan losses or in the level of nonperforming loans;
  • unexpected changes in interest rates;
  • a continued or unexpected 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) subject us to additional regulatory oversight which may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • inability to successfully generate new business in new geographic markets;
  • inability to execute upon new business initiatives;
  • 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; and
  • other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2014. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation'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,
  2015 (A)   2015   2015   2015   2014
Income Statement Data:                            
Interest income $ 27,123   $ 25,806   $ 23,852   $ 22,361   $ 20,786
Interest expense   4,304     4,100     3,508     2,778     2,434
  Net interest income   22,819     21,706     20,344     19,583     18,352
Provision for loan losses   1,950     1,600     2,200     1,350     1,250
  Net interest income after provision for loan losses   20,869     20,106     18,144     18,233     17,102
Wealth management fee income   4,307     4,169     4,532     4,031     3,822
Service charges and fees   849     832     837     805     880
Bank owned life insurance   252     260     248     537     274
Gain on loans held for sale at fair value (Mortgage banking)   117     102     161     148     128
(Loss)/gain on loans held for sale at lower of cost or fair value   -     -     -     -     (3)
Other income   198     164     545     93     142
Securities gains, net   -     83     176     268     44
  Total other income   5,723     5,610     6,499     5,882     5,287
Salaries and employee benefits   10,659     10,322     9,872     9,425     9,188
Premises and equipment   3,390     2,785     2,778     2,616     2,627
FDIC insurance expense   825     416     431     482     453
Other expenses   5,119     3,376     3,185     3,245     3,310
  Total operating expenses   19,993     16,899     16,266     15,768     15,578
Income before income taxes   6,599     8,817     8,377     8,347     6,811
Income tax expense   2,256     3,434     3,139     3,339     2,599
Net income $ 4,343   $ 5,383   $ 5,238   $ 5,008   $ 4,212
                             
                             
Total revenue $ 28,542   $ 27,316   $ 26,843   $ 25,465   $ 23,639
                             
                             
Per Common Share Data:                            
                             
Earnings per share (basic) $ 0.28   $ 0.35   $ 0.34   $ 0.34   $ 0.32
Earnings per share (diluted)   0.28     0.35     0.34     0.33     0.32
                             
Weighted average number of common shares outstanding:                          
Basic   15,498,119     15,253,009     15,082,516     14,909,722     13,037,947
Diluted   15,721,876     15,435,939     15,233,151     15,070,352     13,163,877
                             
Performance Ratios:                            
                             
Return on average assets annualized   0.51%     0.66%     0.70%     0.71%     0.64%
Return on average common equity annualized   6.37%     8.19%     8.24%     8.13%     8.01%
Net interest margin (taxable equivalent basis)   2.79%     2.75%     2.80%     2.88%     2.89%
Efficiency ratio (A)   70.05%     61.14%     61.00%     62.58%     66.01%
Operating expenses / average assets annualized   2.36%     2.07%     2.16%     2.24%     2.36%
                             
     
(A)   The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices, as previously announced. These charges reduced pretax income by $2.5 million, net income by $1.6 million, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B)   Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). 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  
Income Statement Data: 2015 (A)     2014     $     %  
Interest income $ 99,142     $ 75,575     $ 23,567     31 %
Interest expense   14,690       7,681       7,009     91 %
  Net interest income   84,452       67,894       16,558     24 %
Provision for loan losses   7,100       4,875       2,225     46 %
  Net interest income after provision for loan losses   77,352       63,019       14,333     23 %
Wealth management fee income   17,039       15,242       1,797     12 %
Service charges and fees   3,323       3,111       212     7 %
Bank owned life insurance   1,297       1,092       205     19 %
Gain on loans held for sale at fair                            
  Value (Mortgage banking)   528       439       89     20 %
(Loss)/gain on loans held for sale at lower of cost or fair value   -       166       (166 )   -100 %
Other income   1,000       497       503     101 %
Securities gains, net   527       260       267     103 %
  Total other income   23,714       20,807       2,907     14 %
Salaries and employee benefits   40,278       36,241       4,037     11 %
Premises and equipment   11,569       9,963       1,606     16 %
FDIC insurance expense   2,154       1,381       773     56 %
Other expenses   14,925       11,955       2,970     25 %
  Total operating expenses   68,926       59,540       9,386     16 %
Income before income taxes   32,140       24,286       7,854     32 %
Income tax expense   12,168       9,396       2,772     30 %
Net income $ 19,972     $ 14,890       5,082     34 %
                             
                             
Total revenue (See footnote (A) below) $ 108,166     $ 88,701       19,465     22 %
                             
                             
Per Common Share Data:                            
                             
Earnings per share (basic) $ 1.31     $ 1.23     $ .08     7 %
Earnings per share (diluted)   1.29       1.22       .07     6 %
                             
Weighted average number of common shares outstanding:                            
Basic   15,187,637       12,065,615       3,122,022     26 %
Diluted   15,434,996       12,172,107       3,262,889     27 %
                             
Performance Ratios:                            
                             
Return on average assets annualized   0.64 %     0.63 %     0.01 %   2 %
Return on average common equity annualized   7.71 %     7.96 %     -0.25 %   -3 %
                             
Net interest margin (taxable equivalent basis)   2.80 %     3.01 %     -0.21 %   -7 %
                             
Efficiency ratio (B)   63.80 %     67.45 %     -3.65 %   -5 %
                             
Operating expenses / average assets annualized   2.21 %     2.53 %     -0.32 %   13 %
     
(A)   The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices, as previously announced. These charges reduced pretax income by $2.5 million, net income by $1.6 million, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B)   Total revenue includes a $169 thousand gain (for 2014) from sale of loans held for sale at lower of cost or fair value. Excluding this gain, total revenue was $64,893 (for 2014).
(C)   Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). 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,
  2015     2015   2015   2015   2014
ASSETS                              
Cash and due from banks $ 11,550     $ 10,695   $ 6,205   $ 7,439   $ 6,621
Federal funds sold   101       101     101     101     101
Interest-earning deposits   58,509       65,402     32,382     65,283     24,485
  Total cash and cash equivalents   70,160       76,198     38,688     72,823     31,207
                               
Securities available for sale   195,630       220,930     245,897     276,119     332,652
FHLB and FRB stock, at cost   13,984       11,737     15,590     10,598     11,593
                               
Loans held for sale   1,558       27,524     745     4,245     839
                               
Residential mortgage   470,869       469,865     470,863     466,333     466,760
Multifamily mortgage   1,498,975       1,444,334     1,371,139     1,214,714     1,080,256
Commercial mortgage   413,118       399,592     375,440     339,037     308,491
Commercial loans   512,886       456,611     438,461     336,079     308,743
Construction loans   1,401       1,409     1,417     5,777     5,998
Consumer loans   45,044       32,563     29,996     28,206     28,040
Home equity lines of credit   52,649       50,370     51,675     50,399     50,141
Other loans   500       483     2,947     1,755     1,838
  Total loans   2,995,442       2,855,227     2,741,938     2,442,300     2,250,267
  Less: Allowances for loan losses   (25,856 )     24,374     22,969     20,816     19,480
  Net loans   2,969,586       2,830,853     2,718,969     2,421,484     2,230,787
                               
Premises and equipment   30,246       31,310     31,637     32,068     32,258
Other real estate owned   563       330     956     1,103     1,324
Accrued interest receivable   6,820       6,839     6,451     5,943     5,371
Bank owned life insurance   42,885       32,727     32,565     32,404     32,634
Deferred tax assets, net   16,341       14,613     12,673     10,458     10,491
Other assets   16,886       15,902     13,999     12,212     13,241
  TOTAL ASSETS $ 3,364,659     $ 3,268,963   $ 3,118,170   $ 2,879,457   $ 2,702,397
                               
LIABILITIES                              
Deposits:                              
  Noninterest-bearing demand deposits $ 419,887     $ 399,200   $ 386,588   $ 377,399   $ 366,371
  Interest-bearing demand deposits   861,697       829,970     667,847     634,580     600,889
  Savings   115,007       117,665     120,606     115,515     112,878
  Money market accounts   810,709       792,685     717,246     714,466     700,069
  Certificates of deposit - Retail   434,450       411,335     384,235     310,678     198,819
Subtotal "customer" deposits   2,641,750       2,550,855     2,276,522     2,152,638     1,979,026
  IB Demand - Brokered   200,000       243,000     293,000     263,000     188,000
  Certificates of deposit - Brokered   93,720       93,690     94,224     106,694     131,667
Total deposits   2,935,470       2,887,545     2,663,746     2,522,332     2,298,693
                               
Overnight borrowings   40,700       -     87,500     -     54,600
Federal home loan bank advances   83,692       83,692     83,692     83,692     83,692
Capital lease obligation   10,222       10,350     10,475     10,594     10,712
Other liabilities   18,899       19,448     14,881     13,486     12,433
Due to brokers, securities settlements   -       1,528     -     -     -
  TOTAL LIABILITIES   3,088,983       3,002,563     2,860,294     2,630,104     2,460,130
Shareholders' equity   275,676       266,400     257,876     249,353     242,267
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,364,659     $ 3,268,963   $ 3,118,170   $ 2,879,457   $ 2,702,397
                               
                               
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division (market value, not included above) $ 3,321,624     $ 3,250,835   $ 3,445,939   $ 3,053,110   $ 2,986,623
                               
                               
                               
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
     
  As of  
  Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
  2015     2015     2015     2015     2014  
Asset Quality:                                      
Loans past due over 90 days and still accruing $ -     $ -     $ -     $ -     $ -  
Nonaccrual loans   6,747       7,615       7,111       6,335       6,850  
Other real estate owned   563       330       956       1,103       1,324  
  Total nonperforming assets $ 7,310     $ 7,945     $ 8,067     $ 7,438     $ 8,174  
                                       
Nonperforming loans to total loans   0.23 %     0.27 %     0.26 %     0.26 %     0.30 %
Nonperforming assets to total assets   0.22 %     0.24 %     0.26 %     0.26 %     0.30 %
                                       
Accruing TDRs (A) $ 16,045     $ 14,609     $ 13,695     $ 13,561     $ 13,601  
                                       
Loans past due 30 through 89 days and still accruing $ 2,143     $ 2,748     $ 1,744     $ 2,481     $ 1,755  
                                       
Classified loans $ 42,777     $ 41,985     $ 38,676     $ 38,450     $ 35,809  
                                       
Impaired loans $ 23,107     $ 22,224     $ 20,806     $ 19,896     $ 20,451  
                                       
Allowance for loan losses:                                      
  Beginning of period $ 24,374     $ 22,969     $ 20,816     $ 19,480     $ 18,299  
  Provision for loan losses   1,950       1,600       2,200       1,350       1,250  
  Charge-offs, net   (468 )     (195 )     (47 )     (14 )     (69 )
  End of period $ 25,856     $ 24,374     $ 22,969     $ 20,816     $ 19,480  
                                       
                                       
ALLL to nonperforming loans   383.22 %     320.08 %     323.01 %     328.59 %     284.38 %
ALLL to total loans   0.86 %     0.85 %     0.84 %     0.85 %     0.87 %
                                       
     
     
(A)   Does not include $2.6 million at December 31, 2015, $2.8 million at September 30, 2015, $2.2 million at June 30, 2015, $1.4 million at March 31, 2015, and $1.4 million at December 31, 2014 of TDRs included in nonaccrual loans.
     
     
     
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
SELECTED BALANCE SHEET DATA  
(Dollars in Thousands)  
(Unaudited)  
   
   
  Dec 31,     Sept 30,     Dec 31,  
  2015     2015     2014  
Capital Adequacy                      
                       
Equity to total assets (end of period) (A) (B)   8.19 %     8.15 %     8.96 %
                       
Book value per share (C) (D) $ 17.61     $ 17.33     $ 16.36  
                       
                       
  Dec 31,     Sept 30,     Dec 31,  
  2015     2015     2014  
                                   
Regulatory Capital - Holding Company                                  
                                   
Tier I leverage $ 273,738   8.10 %   $ 264,570   8.10 %   $ 240,439   9.11 %
                                   
Tier I capital to risk weighted assets (F)   273,738   10.28       264,570   10.35       240,439   14.38  
                                   
Common equity tier I capital ratio to risk-weighted assets (E) (F)   273,738   10.28       264,570   10.35       N/A   N/A  
                                   
Tier I & II capital to risk-weighted assets (F)   299,593   11.25       288,944   11.30       259,918   15.55  
                                   
                                   
Regulatory Capital - Bank                                  
                                   
Tier I leverage $ 271,641   8.04 %   $ 262,196   8.02 %   $ 230,632   8.74 %
                                   
Tier I capital to risk weighted assets (F)   271,641   10.20       262,196   10.26       230,632   13.80  
                                   
Common equity tier I capital ratio to risk-weighted assets (E) (F)   271,641   10.20       262,196   10.26       N/A   N/A  
                                   
Tier I & II capital to risk-weighted assets (F)   297,497   11.18       286,570   11.21       250,112   14.96  
                                   
(A)   Total shareholders' equity as a percentage of total assets at period end.
(B)   Tangible equity to tangible assets was $8.10 at December 31, 2015, $8.06 at September 30, 2015, $8.17 at June 30, 2015, $8.64 at March 31, 2015, and $8.95 at December 31, 2014. Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which is calculated by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. Tangible equity is calculated as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(C)   Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested.
(D)   Tangible book value per share was $17.40 at December 31, 2015, $17.12 at September 30, 2015, $16.80 at June 30, 2015, $16.57 at March 31, 2015, and $16.32 at December 31, 2014. Tangible book value per share is different than book value per share because it excludes intangible assets. See Non-GAAP financial measures reconciliation included in these tables.
(E)   New capital ratio required under Basel III effective January 1, 2015.
(F)   September 30, 2015 risk based capital ratios are as amended on January 29, 2016.
     
     
 
PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
                   
  For the Quarters Ended
  Dec 31,   Sept 30,   June 30,   March 31,   Dec 31,
  2015   2015   2015   2015   2014
                             
Residential loans retained $ 18,847   $ 20,623   $ 23,117   $ 16,986   $ 10,661
Residential loans sold   7,183     6,078     10,978     8,938     8,230
Total residential loans   26,030     26,701     34,095     25,924     18,891
                             
CRE (includes Community banking)   41,015     47,450     29,561     57,787     14,953
Multifamily (includes Community banking)   107,605     149,763     206,803     209,034     172,021
Commercial loans (includes Community banking)   74,749     37,361     136,483     40,696     89,905
Wealth lines of credit   35,550     24,000     6,150     10,260     -
Total commercial loans   258,919     258,574     378,997     317,777     276,879
                             
Installment loans   1,052     933     1,128     344     2,015
                             
Home equity lines of credit   5,902     3,775     3,225     3,377     4,140
                             
Total loans closed $ 291,903   $ 289,983   $ 417,445   $ 347,422   $ 301,925
                             
                             
                             
  For the Twelve Months Ended
  Dec 31,   Dec 31,
  2015   2014
Residential loans retained $ 79,573   $ 60,099
Residential loans sold   33,177     28,146
Total residential loans   112,750     88,245
           
CRE (includes Community banking)   175,813     54,177
Multifamily (includes Community banking)   673,205     652,685
Commercial loans (includes Community banking)   289,289     242,559
Wealth lines of credit   75,960     -
Total commercial loans   1,214,267     949,421
           
Installment loans   3,457     18,486
           
Home equity lines of credit   16,279     18,067
           
Total loans closed $ 1,346,753   $ 1,074,219
           
           
           

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

   
   
   
PEAPACK-GLADSTONE FINANCIAL CORPORATION  
AVERAGE BALANCE SHEET  
UNAUDITED  
THREE MONTHS ENDED  
(Tax-Equivalent Basis, Dollars in Thousands)  
     
  December 31, 2015     December 31, 2014  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 192,678     $ 901   1.87 %   $ 258,699     $ 1,158   1.79 %
    Tax-exempt (1) (2)   25,516       206   3.23       42,539       244   2.29  
  Loans held for sale   681       11   6.61       747       13   6.85  
  Loans (2) (3):                                      
    Mortgages   465,855       3,809   3.27       466,943       3,889   3.33  
    Commercial mortgages   1,903,842       16,811   3.53       1,297,727       12,376   3.81  
    Commercial   486,353       4,725   3.89       243,024       2,375   3.91  
    Commercial construction   1,404       14   3.99       6,017       65   4.32  
    Installment   42,629       320   3.00       28,129       259   3.68  
    Home equity   51,516       420   3.26       49,495       402   3.25  
    Other   507       12   9.47       599       13   8.68  
    Total loans   2,952,106       26,111   3.54       2,091,934       19,379   3.71  
  Federal funds sold   101       -   0.10       101       -   0.10  
  Interest-earning deposits   123,045       76   0.25       163,287       106   0.26  
      Total interest-earning assets   3,294,127       27,305   3.32 %     2,557,307       20,900   3.27 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   9,133                   6,257              
  Allowance for loan losses   (24,858 )                 (18,796 )            
  Premises and equipment   31,285                   31,975              
  Other assets   73,483                   62,424              
    Total noninterest-earning assets   89,043                   81,860              
Total assets $ 3,383,170                 $ 2,639,167              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 849,929     $ 466   0.22 %   $ 615,907     $ 343   0.22 %
  Money markets   813,112       577   0.28       721,634       474   0.26  
  Savings   115,930       17   0.06       111,604       15   0.05  
  Certificates of deposit - retail   420,831       1,401   1.33       187,126       440   0.94  
    Subtotal interest-bearing deposits   2,199,802       2,461   0.45       1,636,271       1,272   0.31  
  Interest-bearing demand - brokered   274,261       834   1.22       163,000       109   0.27  
  Certificates of deposit - brokered   93,704       502   2.14       131,649       540   1.64  
    Total interest-bearing deposits   2,567,767       3,797   0.59       1,930,920       1,921   0.40  
  Borrowings   88,548       383   1.73       90,828       384   1.69  
  Capital lease obligation   10,266       124   4.83       10,752       129   4.80  
  Total interest-bearing liabilities   2,666,581       4,304   0.65       2,032,500       2,434   0.48  
Noninterest-bearing liabilities:                                      
  Demand deposits   428,412                   380,362              
  Accrued expenses and other liabilities   15,541                   16,005              
  Total noninterest-bearing liabilities   443,953                   396,367              
Shareholders' equity   272,636                   210,300              
  Total liabilities and shareholders' equity $ 3,383,170                 $ 2,639,167              
  Net interest income         $ 23,801                 $ 18,466      
  Net interest spread               2.67 %                 2.79 %
    Net interest margin (4)               2.79 %                 2.89 %
 
(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 35 percent 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, 2015     September 30, 2015  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 192,678     $ 901   1.87 %   $ 214,967     $ 959   1.78 %
    Tax-exempt (1) (2)   25,516       206   3.23       30,682       211   2.76  
  Loans held for sale   681       11   6.61       1,075       10   3.76  
  Loans (2) (3):                                      
    Mortgages   465,855       3,809   3.27       465,603       3,796   3.26  
    Commercial mortgages   1,903,842       16,811   3.53       1,839,312       16,119   3.51  
    Commercial   486,353       4,725   3.89       454,239       4,132   3.64  
    Commercial construction   1,404       14   3.99       1,742       18   4.13  
    Installment   42,629       320   3.00       31,361       268   3.42  
    Home equity   51,516       420   3.26       51,012       415   3.25  
    Other   507       12   9.47       510       12   9.41  
    Total loans   2,952,106       26,111   3.54       2,843,779       24,760   3.48  
  Federal funds sold   101       -   0.10       101       -   0.10  
  Interest-earning deposits   123,045       76   0.25       96,308       46   0.19  
      Total interest-earning assets   3,294,127       27,305   3.32 %     3,186,912       25,986   3.26 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   9,133                   7,434              
  Allowance for loan losses   (24,858 )                 (23,726 )            
  Premises and equipment   31,285                   31,574              
  Other assets   73,483                   68,067              
    Total noninterest-earning assets   89,043                   83,349              
Total assets $ 3,383,170                 $ 3,270,261              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 849,929     $ 466   0.22 %   $ 810,106     $ 356   0.18 %
  Money markets   813,112       577   0.28       757,135       546   0.29  
  Savings   115,930       17   0.06       118,329       17   0.06  
  Certificates of deposit - retail   420,831       1,401   1.33       403,593       1,296   1.28  
    Subtotal interest-bearing deposits   2,199,802       2,461   0.45       2,089,163       2,215   0.42  
  Interest-bearing demand - brokered   274,261       834   1.22       292,456       857   1.17  
  Certificates of deposit - brokered   93,704       502   2.14       93,907       504   2.15  
    Total interest-bearing deposits   2,567,767       3,797   0.59       2,475,526       3,576   0.58  
  Borrowings   88,548       383   1.73       107,770       399   1.48  
  Capital lease obligation   10,266       124   4.83       10,394       125   4.81  
  Total interest-bearing liabilities   2,666,581       4,304   0.65       2,593,690       4,100   0.63  
Noninterest-bearing liabilities:                                      
  Demand deposits   428,412                   398,181              
  Accrued expenses and other liabilities   15,541                   15,619              
  Total noninterest-bearing liabilities   443,953                   413,800              
Shareholders' equity   272,636                   262,771              
  Total liabilities and shareholders' equity $ 3,383,170                 $ 3,270,261              
  Net interest income         $ 23,801                 $ 21,886      
    Net interest spread               2.67 %                 2.63 %
    Net interest margin (4)               2.79 %                 2.75 %
 
(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 35 percent 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, 2015     December 31, 2014  
  Average     Income/         Average     Income/      
  Balance     Expense   Yield     Balance     Expense   Yield  
ASSETS:                                      
Interest-earning assets:                                      
  Investments:                                      
    Taxable (1) $ 231,152     $ 4,079   1.76 %   $ 212,038     $ 4,156   1.96 %
    Tax-exempt (1) (2)   31,158       858   2.75       52,015       1,160   2.23  
  Loans held for sale   1,144       55   4.81       1,029       48   4.66  
  Loans (2) (3):                                      
    Mortgages   465,803       15,189   3.26       489,941       16,524   3.37  
    Commercial mortgages   1,718,097       61,286   3.57       1,156,369       44,319   3.83  
    Commercial   404,908       15,101   3.73       171,701       6,818   3.97  
    Commercial construction   3,679       156   4.24       5,996       262   4.37  
    Installment   32,774       1,096   3.34       24,223       969   4.00  
    Home equity   51,227       1,657   3.23       48,055       1,550   3.23  
    Other   518       48   9.27       571       53   9.28  
    Total loans   2,677,006       94,533   3.53       1,896,856       70,495   3.72  
  Federal funds sold   101       -   0.10       101       -   0.10  
  Interest-earning deposits   95,287       204   0.21       111,554       248   0.22  
      Total interest-earning assets   3,035,848       99,729   3.29 %     2,273,593       76,107   3.35 %
Noninterest-Earning Assets:                                      
  Cash and due from banks   7,445                   6,475              
  Allowance for loan losses   (22,550 )                 (17,462 )            
  Premises and equipment   31,771                   31,220              
  Other assets   67,915                   60,474              
    Total noninterest-earning assets   84,581                   80,707              
Total assets $ 3,120,429                 $ 2,354,300              
                                       
LIABILITIES:                                      
Interest-bearing deposits:                                      
  Checking $ 741,199     $ 1,495   0.20 %   $ 498,408     $ 782   0.16 %
  Money markets   746,329       2,047   0.27       680,760       1,612   0.24  
  Savings   116,289       64   0.06       114,702       59   0.05  
  Certificates of deposit - retail   354,626       4,411   1.24       162,418       1,522   0.94  
    Subtotal interest-bearing deposits   1,958,443       8,017   0.41       1,456,288       3,975   0.27  
  Interest-bearing demand - brokered   268,414       2,534   0.94       128,855       306   0.24  
  Certificates of deposit - brokered   102,937       2,034   1.98       97,944       1,384   1.41  
    Total interest-bearing deposits   2,329,794       12,585   0.54       1,683,087       5,665   0.34  
  Borrowings   113,027       1,602   1.42       95,713       1,533   1.60  
  Capital lease obligation   10,452       503   4.81       10,085       483   4.79  
  Total interest-bearing liabilities   2,453,273       14,690   0.60       1,788,885       7,681   0.43  
  Noninterest-bearing liabilities:                                      
  Demand deposits   394,567                   366,424              
  Accrued expenses and other liabilities   13,530                   11,960              
  Total noninterest-bearing liabilities   408,097                   378,384              
Shareholders' equity   259,059                   187,031              
  Total liabilities and shareholders' equity $ 3,120,429                 $ 2,354,300              
Net interest income         $ 85,039                 $ 68,426      
  Net interest spread               2.69 %                 2.92 %
  Net interest margin (4)               2.80 %                 3.01 %
 
(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 35 percent 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 less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. 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 2015   2015   2015   2015   2014
Shareholders' equity $ 275,676   $ 266,400   $ 257,876   $ 249,353   $ 242,267
Less: Intangible assets   3,281     3,311     3,342     563     563
  Tangible equity   272,395     263,089     254,534     248,790     241,704
                             
Period end shares outstanding   16,068,119     15,805,815     15,592,168     15,440,430     15,155,717
Less: Restricted shares not yet vested   414,188     435,312     436,908     429,642     345,095
Total outstanding shares   15,653,931     15,370,503     15,155,260     15,010,788     14,810,622
Tangible book value per share   17.40     17.12     16.80     16.57     16.32
Book value per share   17.61     17.33     17.02     16.61     16.36
                             
Tangible Equity to Tangible Assets                            
Total Assets   3,364,659     3,268,963     3,118,170     2,879,457     2,702,397
Less: Intangible assets   3,281     3,311     3,342     563     563
  Tangible assets   3,361,378     3,265,652     3,114,828     2,878,894     2,701,834
Tangible equity to tangible assets   8.10%     8.06%     8.17%     8.64%     8.95%
Equity to assets   8.19%     8.15%     8.27%     8.66%     8.96%
                             
                             
                             
  Three Months Ended  
  Dec 31,     Sept 30,     June 30,     March 31,     Dec 31,  
Efficiency Ratio 2015     2015     2015     2015     2014  
                             
Net interest income $22,819     $21,706     $20,344     $19,583     $18,352  
Total other income 5,723     5,610     6,499     5,882     5,287  
Less: (Loss)/gain on loans held for sale at lower of cost or fair value -     -     -     -     (3 )
Less: Securities gains, net -     83     176     268     44  
Total recurring revenue 28,542     27,233     26,667     25,197     23,598  
                             
Operating expenses 19,993     16,899     16,266     15,768     15,578  
Less: ORE provision -     250     -     -     -  
Total operating expenses 19,993     16,649     16,266     15,768     15,578  
                             
Efficiency ratio 70.05 %   61.14 %   61.00 %   62.58 %   66.01 %
                             
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices 61.30 %                        
                             
                             
  Twelve Months Ended              
  Dec 31,     Dec 31,              
Efficiency Ratio 2015     2014              
                           
Net interest income $ 84,452     $ 67,894              
Total other income   23,714       20,807              
Less: Gain on loans held for sale at lower of cost or fair value   -       166              
Less: Securities gains, net   527       260              
Total recurring revenue   107,639       88,275              
                           
Operating expenses   68,926       59,540              
Less: ORE provision   250       -              
Total operating expenses   68,676       59,540              
                           
Efficiency ratio   63.80 %     67.45 %            
                           
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices   61.71 %                    
                           

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