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COPY OF Peapack-Gladstone Financial Corporation Reports Strong First Quarter Results, Driven By Noninterest Income Totaling 36% Of Total Revenue

GlobeNewswire Inc.

Bedminster, NJ, April 29, 2021 (GLOBE NEWSWIRE) — via NewMediaWire — Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its first quarter 2021 results.

This earnings release should be read in conjunction with the Company’s Q1 2021 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 $49.61 million, net income of $13.18 million and diluted earnings per share (“EPS”) of $0.67 for the quarter ended March 31, 2021, compared to $46.27 million, $1.37 million and $0.07, respectively, for the same three month period ended March 31, 2020.

The 2021 quarter included increased noninterest income, principally wealth management income and income from capital markets activities (which includes mortgage banking income, loan level back-to-back swap income, SBA loan income, and corporate advisory fee income). The 2021 quarter also included a significantly reduced provision for loan losses when compared to the same quarter last year. The 2021 quarter included a $225,000 provision while the 2020 quarter included a $20.0 million provision, which was due to the environment at that time created by the COVID-19 pandemic, which led to increased qualitative loss factors when calculating the allowance for loan losses.

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The 2021 three-month period also included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank. The 2020 three-month period included a tax benefit of $3.2 million 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.

As previously disclosed, on January 28, 2021, the Company authorized the repurchase of up to 948,735 shares, or approximately 5% of its outstanding shares. During the first quarter of 2021 the Company purchased 158,033 shares at an average price of $27.71 for a total cost of $4.4 million under this program.

Douglas L. Kennedy, President and CEO, said, “Our capital is strong and we believe that purchasing the 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, “During the first quarter of 2021 the Company participated in the 2021 round of the Paycheck Protection Program (“PPP”) which created much needed funding to qualifying small businesses and organizations. We are proud to say that during the quarter we assisted with over $142 million of PPP loans - $47 million processed, closed and funded by the Bank, and another $95 million referred directly to a third party for processing and funding. The Company plans to sell the $46 million of loans in the second quarter to the same third party, who is extremely proficient in the servicing and forgiveness processes for PPP loans.”

EXECUTIVE SUMMARY:

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

March 2021 Quarter Compared to Prior Year Quarter

Three Months Ended

Three Months Ended

March 31,

March 31,

Increase/

(Dollars in millions, except per share data)

2021

2020

(Decrease)

Net interest income

$

31.79

$

31.75

$

0.04

0

%

Wealth management fee income (A)

12.13

9.96

2.17

22

Capital markets activity (B)

3.57

2.84

0.73

26

Other income

2.12

1.72

0.40

23

Total other income

17.82

14.52

3.30

23

Operating expenses (C)

31.59

28.24

3.35

12

Pretax income before provision for loan losses

18.02

18.03

(0.01

)

(0

)

Provision for loan and lease losses (D)

0.23

20.00

(19.77

)

(99

)

Pretax income

17.79

(1.97

)

19.76

N/A

Income tax expense/(benefit) (E)

4.61

(3.34

)

7.95

N/A

Net income (C)

$

13.18

$

1.37

$

11.81

862

%

Diluted EPS

$

0.6747

$

0.0700

$

0.6047

864

%

Total Revenue (F)

$

49.61

$

46.27

$

3.34

7

%

Return on average assets annualized

0.89

%

0.11

%

0.78

Return on average equity annualized

10.03

%

1.08

%

8.95

  1. The March 2021 quarter included a full quarter of wealth management fee income and expense related to the December lift outs of teams from Lucas Capital Management (“Lucas”) and Noyes Capital Management (“Noyes”) - approximately $600,000 of wealth management fee income and approximately $400,000 of operating expenses were recorded in the 2021 quarter.

  2. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, corporate advisory activities and mortgage banking activities. There were no fees related to loan level back-to-back swap activities in the quarter ended March 31, 2021, compared to $1.4 million in the March 2020 quarter.

  3. The quarter ended March 31, 2021 included $1.5 million of severance expense related to certain staff reorganization within several areas of the Bank. This expense reduced pretax income before provision for loan losses and pretax income by $1.5 million each; and reduced net income by $1.1 million; diluted EPS by $0.06; ROA by 0.08%; and ROE by 0.86%, respectively.

  4. The March 2020 quarter included a provision for loan and lease losses of $20.0 million, primarily due to the environment at that time 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 equals net interest income plus total other income.

March 2021 Quarter Compared to Linked Quarter

Three Months Ended

Three Months Ended

March 31,

December 31,

Increase/

(Dollars in millions, except per share data)

2021

2020

(Decrease)

Net interest income

$

31.79

$

31.74

$

0.05

0

%

Wealth management fee income (A)

12.13

10.79

1.34

12

Capital markets activity (B)

3.57

1.90

1.67

88

Other income

2.12

1.71

0.41

24

Total other income

17.82

14.40

3.42

24

Operating expenses (C)

31.59

39.25

(7.66

)

(20

)

Pretax income before provision for loan losses

18.02

6.89

11.13

162

Provision for loan and lease losses

0.23

2.35

(2.12

)

(90

)

Pretax income

17.79

4.54

13.25

292

Income tax expense

4.61

1.51

3.10

205

Net income (C)

$

13.18

$

3.03

$

10.15

335

%

Diluted EPS

$

0.67

$

0.16

$

0.51

319

%

Total Revenue (D)

$

49.61

$

46.14

$

3.47

8

%

Return on average assets annualized

0.89

%

0.21

%

0.68

Return on average equity annualized

10.03

%

2.32

%

7.71

  1. The March 2021 quarter included a full quarter of wealth management fee income and expense related to the lift outs of teams from Lucas and Noyes - approximately $600,000 of wealth management fee income and approximately $400,000 of operating expenses were recorded in the 2021 quarter.

  2. Capital markets activity includes loan level back-to-back swap activities, the SBA lending and sale program, corporate advisory and mortgage banking activities.

  3. The quarter ended March 31, 2021 included $1.5 million of severance expense related to certain staff reorganization within several areas of the Bank. This expense reduced pretax income before provision for loan losses and pretax income by $1.5 million each; and reduced net income by $1.1 million; diluted EPS by $0.06; ROA by 0.08%; and ROE by 0.86%, respectively. The December 31, 2020 quarter included $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. Total revenue equals net interest income plus total other income.

The Company’s near-term priorities include:

  • Actively deploy/manage capital and liquidity by expanding our lending activities and executing on our recently announced stock repurchase program.

  • Continue to grow and expand our core Wealth Management, Commercial Banking and Capital Markets businesses through core operations, strategic hires, lift-outs, and acquisition of wealth management firms.

  • Expand our Net Interest Margin.

  • Investment in digital enhancements.

  • Continue to target fee income at 35% - 45% of total bank revenue.

  • Drive ROA to greater than 1% and return on average tangible common equity to greater than 14%.

Other select highlights for the quarter included:

  • Total noninterest income totaled $17.8 million for the March 2021 quarter, accounting for 36% of total revenue (within our target of 35% to 45% of total revenue).

  • Wealth management fee income, which comprised approximately 24% of the Company’s total revenue for the three-months ended March 31, 2021, continues to contribute significantly to the Company’s diversified revenue sources.

  • The Company completed its first major corporate advisory/investment banking deal.

  • As of March 31, 2021, total C&I loans (including PPP loans held in portfolio and held for sale) comprised 45% of the total loan portfolio.

  • Deposits totaled $4.94 billion at March 31, 2021. This reflected net growth of $504 million or 11% compared to $4.44 billion at March 31, 2020, despite managed reductions in higher cost CDs of $184 million.

  • The Company’s net interest margin improved in the quarter when compared to the December 2020 quarter (see subsequent discussion of Net Interest Income / Net Interest Margin).

  • In addition to $1.4 billion (23% of total assets) of balance sheet liquidity (investments, interest-earning deposits and cash) as of March 31, 2021, the Company also has access to approximately $2.8 billion of available secured funding at the Federal Home Loan Bank and the Federal Reserve.

  • Nonperforming assets at March 31, 2021 were $11.8 million, or 0.20% of total assets. Loans past due 30 to 89 days totaled $1.6 million at March 31, 2021. Loans on deferral status as of March 31, 2021 were $43 million (less than 1% of total loans).

  • As previously announced, the Company opened a retail location in Boonton/Mountain Lakes, New Jersey.

   

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)
(Unaudited)

As of

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

2021

2020

2020

2020

2020

ASSETS

Cash and due from banks

$

8,159

$

10,629

$

8,400

$

5,608

$

6,171

Federal funds sold

102

102

102

102

102

Interest-earning deposits

468,276

642,591

670,863

617,117

767,730

Total cash and cash equivalents

476,537

653,322

679,365

622,827

774,003

Securities available for sale

875,301

622,689

596,929

539,742

400,558

Equity security

14,852

15,117

15,159

15,159

14,034

FHLB and FRB stock, at cost

13,699

13,709

18,433

18,598

40,871

Residential mortgage

498,884

520,188

532,120

536,015

532,063

Multifamily mortgage

1,178,940

1,127,198

1,168,796

1,178,494

1,203,487

Commercial mortgage

697,599

694,034

722,678

761,910

760,648

Commercial loans (A)

1,982,570

1,975,337

1,930,984

2,316,125

1,810,214

Consumer loans

36,519

37,016

51,859

53,111

53,365

Home equity lines of credit

45,624

50,547

52,194

54,006

55,856

Other loans

199

225

260

272

347

Total loans

4,440,335

4,404,545

4,458,891

4,899,933

4,415,980

Less: Allowances for loan and lease losses

67,536

67,309

66,145

66,065

63,783

Net loans

4,372,799

4,337,236

4,392,746

4,833,868

4,352,197

Premises and equipment

23,260

21,609

21,668

21,449

21,243

Other real estate owned

50

50

50

50

50

Accrued interest receivable

23,916

22,495

22,192

15,956

11,816

Bank owned life insurance

46,448

46,809

46,645

46,479

46,309

Goodwill and other intangible assets

43,524

43,891

39,622

39,943

40,265

Finance lease right-of-use assets

4,143

4,330

4,517

4,704

4,891

Operating lease right-of-use assets

10,186

9,421

10,011

10,810

11,553

Other assets (B)

64,912

99,764

110,770

111,630

113,668

TOTAL ASSETS

$

5,969,627

$

5,890,442

$

5,958,107

$

6,281,215

$

5,831,458

LIABILITIES

Deposits:

Noninterest-bearing demand deposits

$

908,922

$

833,500

$

838,307

$

911,989

$

581,085

Interest-bearing demand deposits

1,987,567

1,849,254

1,858,529

1,804,102

1,680,452

Savings

141,743

130,731

127,737

123,140

112,668

Money market accounts

1,256,605

1,298,885

1,251,349

1,183,603

1,163,410

Certificates of deposit – Retail

474,668

530,222

586,801

629,941

651,000

Certificates of deposit – Listing Service

31,631

32,128

32,677

35,327

38,895

Subtotal “customer” deposits

4,801,136

4,674,720

4,695,400

4,688,102

4,227,510

IB Demand – Brokered

110,000

110,000

130,000

130,000

180,000

Certificates of deposit – Brokered

33,777

33,764

33,750

33,736

33,723

Total deposits

4,944,913

4,818,484

4,859,150

4,851,838

4,441,233

Short-term borrowings

15,000

15,000

15,000

15,000

515,000

FHLB advances (C)

105,000

105,000

105,000

Paycheck Protection Program Liquidity Facility (D)

168,180

177,086

183,790

535,837

Finance lease liability

6,528

6,753

6,976

7,196

7,402

Operating lease liability

10,509

9,737

10,318

11,116

11,852

Subordinated debt, net (E)

181,837

181,794

83,585

83,529

83,473

Other liabilities (B)

120,219

154,466

156,472

163,719

160,173

Due to brokers

15,088

10,885

TOTAL LIABILITIES

5,447,186

5,363,320

5,435,379

5,773,235

5,335,018

Shareholders’ equity

522,441

527,122

522,728

507,980

496,440

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY

$

5,969,627

$

5,890,442

$

5,958,107

$

6,281,215

$

5,831,458

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

$

9.4

$

8.8

$

7.6

$

7.2

$

6.4




  1. Includes PPP loans of $233 million at March 31, 2021, $196 million at December 31, 2020, $202 million at September 30, 2020 and $547 million at June 30, 2020.

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

  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

March 31,

Dec 31,

Sept 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Asset Quality:

Loans past due over 90 days and still accruing

$

$

$

$

$

Nonaccrual loans (A)

11,767

11,410

8,611

26,697

29,324

Other real estate owned

50

50

50

50

50

Total nonperforming assets

$

11,817

$

11,460

$

8,661

$

26,747

$

29,374

Nonperforming loans to total loans

0.27

%

0.26

%

0.19

%

0.54

%

0.66

%

Nonperforming assets to total assets

0.20

%

0.19

%

0.15

%

0.43

%

0.50

%

Performing TDRs (B)(C)

$

197

$

201

$

2,278

$

2,376

$

2,389

Loans past due 30 through 89 days and still accruing (D)(E)

$

1,622

$

5,053

$

6,609

$

3,785

$

8,261

Loans subject to special mention

$

166,013

$

162,103

$

129,700

$

27,922

$

13,222

Classified loans

$

25,714

$

37,771

$

41,263

$

63,562

$

58,938

Impaired loans

$

11,964

$

16,204

$

15,514

$

33,708

$

36,369

Allowance for loan and lease losses:

Beginning of period

$

67,309

$

66,145

$

66,065

$

63,783

$

43,676

Provision for loan and lease losses

225

2,350

5,150

4,900

20,000

(Charge-offs)/recoveries, net

2

(1,186

)

(5,070

)

(2,618

)

107

End of period

$

67,536

$

67,309

$

66,145

$

66,065

$

63,783

ALLL to nonperforming loans

573.94

%

589.91

%

768.15

%

247.46

%

217.51

%

ALLL to total loans

1.52

%

1.53

%

1.48

%

1.35

%

1.44

%

General ALLL to total loans (F)

1.45

%

1.47

%

1.48

%

1.26

%

1.30

%

  1. Excludes one commercial loan held for sale of $5.6 million at March 31, 2021. 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 $3.9 million at March 31, 2021, $4.0 million at December 31, 2020, $5.2 million at September 30, 2020, $23.2 million at June 30, 2020 and $25.9 million at March 31, 2020 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. Total ALLL less specific reserves equals general ALLL.

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

March 31,

December 31,

March 31,

2021

2020

2020

Capital Adequacy

Equity to total assets (A)(J)

8.75

%

8.95

%

8.51

%

Tangible Equity to tangible assets (B)

8.08

%

8.27

%

7.88

%

Tangible Equity to tangible assets excluding
PPP loans (C)

8.41

%

8.55

%

7.88

%

Book value per share (D)

$

27.45

$

27.78

$

26.33

Tangible Book Value per share (E)

$

25.16

$

25.47

$

24.20


March 31,

December 31,

March 31,

2021

2020

2020

Regulatory Capital Holding Company

Tier I leverage

$

491,384

8.66%

$

483,535

8.53%

$

458,640

8.93%

Tier I capital to risk-weighted assets

491,384

12.00

483,535

11.93

458,640

10.71

Common equity tier I capital ratio
to risk-weighted assets

491,355

12.00

483,500

11.93

458,639

10.71

Tier I & II capital to risk-weighted assets

724,599

17.70

716,210

17.67

595,770

13.91

Regulatory Capital Bank

Tier I leverage (F)

$

564,533

9.95%

$

549,575

9.71%

$

527,433

10.28%

Tier I capital to risk-weighted assets (G)

564,533

13.79

549,575

13.55

527,433

12.33

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

564,504

13.78

549,540

13.55

527,432

12.33

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

615,925

15.04

600,478

14.81

581,025

13.58

  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% ($284 million)

  7. Regulatory well capitalized standard = 8.00% ($328 million)

  8. Regulatory well capitalized standard = 6.50% ($266 million)

  9. Regulatory well capitalized standard = 10.00% ($410 million)

  10. PPP loans with a balance of $233 million and $196 million increased total assets at March 31, 2021 and December 31, 2020, respectively.