SOURCE: Peapack-Gladstone Financial Corporation
BEDMINSTER, NJ, via eTeligis, 1/30/2014 4:32:00 PM
Peapack-Gladstone Financial Corporation Reports Another Solid Quarter of Accomplishment
BEDMINSTER, NJ – via eTeligis – Peapack Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded net income of $2.40 million and diluted earnings per share of $0.25 for the quarter ended December 31, 2013.
Doug Kennedy, President and CEO, said, "We had another solid quarter of accomplishment, including achieving several new records."
– We continued to implement and follow through on our Strategic Plan — "Expanding Our Reach." The Plan focuses on the client experience and aggressively building and maintaining a private banking platform.
– In support of the growth associated with the Plan, we successfully raised $42 million (gross) of common equity in a rights offering and sale to standby investors that closed on December 12, 2013. Over 52 percent of the offering was subscribed by existing shareholders. The remainder was purchased by nine pre-arranged standby investors, the majority of which were new institutional shareholders in the Company.
– Total end of year loan balances reached another record level for the Company — $1.57 billion. This level reflected an increase of $442 million or 39 percent from the balance at December 31, 2012, and included an increase of $177 million in the fourth quarter of 2013.
– Total deposits also reached another record level. The end of year balance of $1.65 billion reflected an increase of $131 million or nearly nine percent from the balance at December 31, 2012, and included an increase of $75 million in the fourth quarter of 2013.
– The Company’s net interest income for the December 2013 quarter reached another quarterly record level — $14.53 million. This level reflected improvement when compared to $12.76 million for the December 2012 quarter, and also reflected improvement when compared to $13.37 million for the immediately preceding September 2013 quarter.
– At December 31, 2013, the market value of assets under administration at the Bank’s Wealth Management Division of $2.69 billion was also another record for the Company. This level reflected an increase of 17 percent from the balance at December 31, 2012.
– Fee income from Peapack-Gladstone Bank’s Wealth Management Division of $3.55 million for the December 2013 quarter reflected growth of over 21 percent when compared to the $2.93 million for the December 2012 quarter.
– Total revenue (net interest income plus other income) of $19.50 million for the December 2013 quarter reflected improvement when compared to prior quarters in 2013.
– Trends in asset quality continue to demonstrate strong improvement when compared to prior periods. For example, nonperforming assets declined in both dollars and as a percentage of assets, to just 0.44 percent of total assets as of December 31, 2013, compared to 0.91 percent of total assets as of December 31, 2012.
– The book value per share at December 31, 2013 of $14.79 reflected improvement when compared to $14.12 at September 30, 2013 and $13.87 at December 31, 2012.
– Capital ratios were benefitted by the December 2013 capital raise and were improved and very strong as of December 31, 2013, even with nearly $300 million growth in assets for the year, as well as migration of lower risk weighted investment security cash flows into loans.
The $3.53 million pre-tax income, $2.40 million net income and $0.25 fully diluted earnings per share for the December 2013 quarter were negatively impacted by a $204 thousand ($128 thousand net of tax) search fee related to the new head of Wealth Management and also $602 thousand ($378 thousand net of tax) of accelerated depreciation expense related to the closing of our Operations Center and consolidation of the staff into our Administration building and equipment to an off-premises third party location.
Mr. Kennedy noted, "As we previously announced, John Babcock will join the Company, effective March 10, 2014, as the head of private wealth management. John is a proven leader in the wealth management space and will be a tremendous asset to the Company as we continue to execute our strategy."
Finn Caspersen Jr., Senior Executive Vice President and Chief Operating Officer of the Company, commented, "We are pleased to now have all of our operations support staff consolidated into our Administration building and our core operating system equipment located at an off-premises third party location. These moves have created operating efficiencies; reduced risk from a disaster preparedness perspective; and created a savings relative to ongoing premises and equipment expenses."
Net Interest Income and Margin
Net interest income was $14.53 million for the fourth quarter of 2013, reflecting an increase of $1.77 million from the same quarter last year. The net interest margin, on a fully tax-equivalent basis, was 3.26 percent for the December 2013 quarter compared to 3.42 percent for the December 2012 quarter.
Net interest income for the current 2013 quarter benefitted from significant loan growth during 2013, principally multifamily and commercial mortgage, funded by deposits, borrowings, and a decline in lower yielding investment securities and interest earning cash balances.
Net interest margin for the December 2013 quarter declined when compared to the December 2012 quarter due to the effect of low market yields, which compressed asset yields more than deposit costs. The 3.26 percent net interest margin for the December 2013 quarter showed only minor compression when compared to the 3.28 percent for the immediately preceding September 2013 quarter.
Average Loans/Loan Originations
For the fourth quarter of 2013, average loans totaled $1.49 billion as compared to $1.13 billion for the same quarter in 2012, reflecting an increase of $366 million, or 33 percent. The average commercial mortgage and commercial loan portfolio for the quarter ended December 2013 increased $358 million, or 68 percent, from the same quarter of 2012. The increase was attributable to a more concerted focus on this type of business in both the New Jersey and New York City markets, as well as demand from high-quality borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.
Total loan originations were $243 million for the fourth quarter of 2013, up significantly from $116 million for the same quarter of 2012. Loan originations were $779 million for the twelve months ended December 31, 2013, also up significantly from $397 million for the same twelve month period of 2012. Included in the total were commercial mortgage (principally multifamily) / commercial loan originations of $551 million and $202 million for the twelve months and three months ended December 31, 2013, respectively, compared to $150 million and $55 million for the 2012 periods, respectively.
Mr. Kennedy said, "We are focused on generating solid lending growth, and we have been successful. As part of our Strategic Plan, we introduced a comprehensive Commercial & Industrial (C&I) lending program and we have closed $97 million of volume for the year. We expect such volume to continue to increase in future periods. Further, our multifamily and commercial real estate lenders have generated significant closed volume and continue to maintain very robust pipelines."
For the December 2013 quarter, average total deposits (interest-bearing and noninterest-bearing) increased $216 million or 15 percent when compared to the same quarter last year. Over that same period, the Company saw growth in each of its deposit categories, except certificates of deposit. For the fourth quarter of 2013, average certificates of deposit (CDs) declined $23 million from the same 2012 quarter. These higher-cost CDs were replaced with lower-cost, more stable core deposits.