Peapack-Gladstone Financial Corporation · NASDAQ:PGC
Peapack-Gladstone Financial — Shareholder Meeting (April 2017)
64 slides from Peapack-Gladstone Financial's shareholder meeting presentation, Apr 25, 2017
Slide 1: Annual Meeting: Expanding Our Reach
Annual Meeting “Expanding Our Reach” April 25, 2017 P EAPACK - G LADSTONE B ANK
Slide 2: Forward-looking statements
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 view of future interest income and net loans, Man agement’s confidence and strategies an
Slide 3: 2016 Highlights
A year ago, we told you we faced headwinds arising from increased risk management spends, higher FDIC premiums, and the effects of stock market volatility on wealth revenue. We also told you that despite these headwinds, we would continue to create shareholder value. We did so, as 2016 results inclu
Slide 4: One Year Comparative Stock Price Performance vs. NJ Peers
One Year Comparative Stock Price Performance PGC Stock Price Performance vs. NJ Peers 1. NJ Peers defined as commercial banks publicly traded on NASDAQ, NYSE or NYSE MKT that are headquartered in New Jersey Note: Market data as of December 31, 2016 Source: SNL Financial (30%) (20%) (10%) 0% 10% 20%
Slide 5: PGC Stock Price Performance vs. National Indices
PGC Stock Price Performance vs. National Indices (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 60% 01/01/16 02/01/16 03/01/16 04/01/16 05/01/16 06/01/16 07/01/16 08/01/16 09/01/16 10/01/16 11/01/16 12/01/16 PGC +49.8% NASDAQ Bank +35.0% KBW Nasdaq Bank +25.6% Note: Market data as of December 31, 2016 Sou
Slide 6: Vision, Core Principles and Foundation
A high - performing boutique bank, leaders in wealth, lending and deposit solutions, known nationally for our unparalleled client service, integrity and trust. Our Foundation • Professionalism • Clients First • Compete to Win • Invested in Our Community • One Team Vision Core Principles Integrity /
Slide 7: Profitability: Strong EPS Momentum Since Launching Our Strategy
Profitability: Strong EPS Momentum Since Launching our Strategy – Expanding Our Reach $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 2013 2014 2015 2016 1.01 1.22 1.29 1.60 1. 2015 includes $2.5MM of non - recurring charges related to the closure of two branches 1 YOY Growth +24.0% 7
Slide 8: Four Year Comparative Stock Price Performance
Four Year Comparative Stock Price Performance PGC Stock Price Performance vs. NJ Peers and National Indices 1. NJ Peers defined as commercial banks publicly traded on NASDAQ, NYSE or NYSE MKT that are headquartered in New Jersey Note: Market data as of December 31, 2016 Source: SNL Financial (20%) 0
Slide 9: People, Market, and Unique Business Model
People Market Efficiency, Growth, and Profitability • Shared common vision • Very talented team with ties to the market • High levels of motivation and engagement • Act as a single team • Entrepreneurial culture • We operate in three of the top ten most affluent counties nationwide • New York MSA of
Slide 10: Executive management team
Douglas L. Kennedy President & Chief Executive Officer 38 years experience; Before joining in 2012, he served as President of the NJ Market for Capital One Bank. He has held key executive level positions and had great success building formidable regional and national specialty banking business at Fl
Slide 11: Market demographics by New Jersey county
Population Household Income Median HHI Total Projected $100K - $199K > $200K Projected Branches Population Change Change % of % of HHI Change in Market 20172010-20172017-2022 Number Total Number Total 20172017-2022 NJ Market (County) Total PGC (Actual) (%) (%) (Actual)Market (Actual)Market ($) (%)Ra
Slide 12: Client-centered full service banking approach
• Full service banking with every conversation aimed at helping clients create , grow , protect & eventually transition their wealth. • Deep understanding of our clients needs , goals, and aspirations. » It’s about the client; not about us. » Risk management tolerance, time horizon, and other tradit
Slide 13: Credit Risk Management Update
• Invested $2MM in 2016 to enhance Risk Management practices. • Created a data warehouse containing more than 65,000 data points. • All loan related policies updated during 2016, including review by appropriate third party experts. • Quarterly market analysis provided by third parties for various pr
Slide 14: Credit Risk Management - Metrics & Performance
1. Nonperforming loans defined as nonaccrual loans plus loans 90+ days past due 2. Texas Ratio defined as nonaccrual loans plus other real estate owned and loans 90+ day past due as a percentage of the sum of tangible common equity and loan loss reserves Texas Ratio² NPLs¹ / Loans NCOs / Average Loa
Slide 15: Enterprise Risk Management Update
• ERM is the leading approach to managing and optimizing risks. This approach enables PGB to determine how much risk is acceptable to our organization. • Risk assessment programs covering operation risk, compliance, business continuity, vendor risks, technology, and regulatory compliance. • ERM embr
Slide 16: Robust balance sheet risk management
Robust balance sheet risk management: Capital • Ratios well above well capitalized standards. • Stress test enhanced to bottom up / top down in Q1 2016. • Received first ever bond rating in 2016 – investment grade from Kroll Bond Rating Agency. • Raised $50 million in subordinated debt, which qualif
Slide 17: Expanding Our Reach Designed to Mitigate Three Headwinds
• Tighter margins due to a flattening of the yield curve. • Increased regulatory and compliance costs. • Continued migration from “bricks and mortar” to technology based delivery channels. Launched in 2013, “Expanding Our Reach” was Designed to Mitigate Three Headwinds 17
Slide 18: Treasury Yield Curves
12/31/2012 – 3/31/2017 2 and 10 Year Treasury Yield Curves Note: Market data as of March 31, 2017 Source: SNL Financial 03/31/17 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 12/31/12 09/16/13 06/02/14 02/16/15 11/02/15 07/18/16 2y US T-Note 10y US T-Note 18
Slide 19: Technology Has Fundamentally Changed Our Business
Technology has Fundamentally Changed Our Business Fewer transactional clients come to our branches. But clients continue to want information and advice 19
Slide 20: Technology Has Created Unprecedented Levels of Strategic Risk
Technology has Created Unprecedented Levels of Strategic Risk Technology has only one job – eliminating jobs! OLD NEW Land Lines Smart Phones Sears, Kmart, Sports Authority Amazon Taxis Uber Hotels AirBNB Travel and meetings Go To, Skype etc US Post Office Email Blockbuster Video Video Streaming 20
Slide 21: Expanding Our Reach Addresses Strategic Risk
“Expanding Our Reach” Addresses Strategic Risk and Positions Us for a Prosperous Future PGB’s Historic Operating Model • Historical Perspective • Transactions • Products/Customers • Advertising • Brick and Mortar • SILO’ s • Single Stress Scenario Plans • Regulatory Constraints • Audit • Job Trainin
Slide 22: Premier Banking Center Morristown, NJ
Premier Banking Center Morristown, NJ 22
Slide 23: Premier Banking Center Morristown, NJ
Premier Banking Center Morristown, NJ 23
Slide 24: Premier Banking Center Bernardsville, NJ
Premier Banking Center Bernardsville, NJ 24
Slide 25: Central to Our Strategy: Wealth Management
• $3.7 billion in AUA as of 12/31/16. • Managed AUM inflows totaled $250 million in 2016 with strong end of year pipeline. • Approximately $300 million of traditional bank products (loans, deposits) delivered by Wealth Private Bankers in 2016. • Stage is set for strategic wealth management acquisiti
Slide 26: Wealth Management Performance
Wealth Management Assets Under Admin Wealth Management Fee Income Wealth Management Performance $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 2012 2013 2014 2015 2016 (Dollars in Millions) $2.00 $2.25 $2.50 $2.75 $3.00 $3.25 $3.50 $3.75 2012 2013 2014 2015 2016 (Dollars in Billions) $12.28 $13.84
Slide 27: Wealth Provides an Enviable Revenue Mix
1. Includes SBA Income, SWAP Income, Deposit & Loan Fees, Mortgage Banking, and BOLI Wealth Provides an Enviable Revenue Mix 76.9% 14.6% 7.4% 0.1% 1.0% 78.1% 15.7% 5.7% 0.5% For the Year Ended December 31, 2015 For the Year Ended December 31, 2016 Total Fee Income 21.9% of Total Revenue Total Fee In
Slide 28: Wealth Centered Strategy Attracting Higher Value Clients
Our Wealth Centered Strategy Is Attracting Higher Value Clients Account Type New Accounts Opened 2013 - 2017 % o f Total Business Legacy Accounts Opened 1921 - 2012 % of Total Business % Increase in Average Account Size Average Deposit $92,637 68% $30,941 32% 199% Average Loan $1,360,487 86% $245,14
Slide 29: Human Capital
Human Capital Full Time Equivalent (FTE) 290 300 310 320 330 340 350 12/31/2013 12/31/2014 12/31/2015 12/31/2016 326 316 338 306 29
Slide 30: Deposits Per Branch
Deposits Per Branch $50 $70 $90 $110 $130 $150 $170 $190 12/31/2012 112/31/2013 12/31/2014 12/31/2015 12/31/2016 (Dollars in Millions) $66 $140 $171 $72 $100 Peer Group Average $69MM 30
Slide 31: Deposits and Loans Per Employee
Deposits and Loans Per Employee $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 12/31/2013 12/31/2014 12/31/2015 12/31/2016 (Dollars in Thousands) Deposits Loans 5,053 7,512 9,289 10,094 4,835 7,357 9,484 9,804 Deposit CAGR 25.9% Loan CAGR 26.6% 31
Slide 32: Positive Operating Leverage
1. Efficiency ratio is calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (ne t i nterest income plus noninterest income less, gain on securities and gain on loans held for sale at lower of cost or fair value); See non - GAAP financial measures reconci
Slide 33: Earnings Momentum
1. 2015 reflects reported net income and EPS as per 10 - K; includes $2.50 million of pre - tax non - recurring charges related to the closure of two branches Earnings Momentum $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 2013 2014 2015 2016 1 Net Income Earnings Per Share $0.40 $0.60 $0.80 $1.00 $1.20
Slide 34: Enhanced Returns
Enhanced Returns 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 2013 2014 2015 2016 Return on Average Equity (ROAE) Return on Average Assets (ROAA) 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 2013 2014 2015 2016 7.37% 7.96% 7.71% 8.92% 0.54% 0.63% 0.64% 0.72% 1. 2015 includes $2.5M
Slide 35: Loan Growth
Note: Gross loans include loans held for sale Loan Growth $0.000 $0.500 $1.000 $1.500 $2.000 $2.500 $3.000 $3.500 2012 2013 2014 2015 2016 $2.997 $2.251 $1.576 $1.153 $3.314 YOY Growth +11% (Dollars in Billions) 35
Slide 36: Loan Composition and Targets
Loan Composition and Targets 12/31/2012 vs 12/31/2016 Multifamily Commercial & Industrial CRE Resident ial , Consumer & Other 44.1% 16.6% 20.1% 19.2% 14.0% 10.0% 22.4% 53.6% 12/31/2012 12/31/2016 Target: 25% - 35% Target: 30% - 35% Target: 15% - 20% Target: 15% - 25% 36
Slide 37: Multifamily Loans
Multifamily Loans $100 $300 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 2012 2013 2014 2015 2016 (Dollars in Millions) $162 $542 $1,080 $1,499 $1,460 YOY Decline - 3% Note: Multifamily Loans include loans held for sale 50% Total Loans 44% Total Loans 37
Slide 38: Multifamily portfolio profile
Proven track record of providing solid risk - adjusted returns Geographically diversified portfolio – as of December 31, 2016: • New York – 51%; Top Markets – Bronx and Brooklyn • New Jersey – 38%; Top Markets – Essex, Hudson, Passaic • Pennsylvania – 11%; Top Markets – Suburban Philadelphia and Buc
Slide 39: Commercial & Industrial Loans
Commercial & Industrial Loans $0 $100 $200 $300 $400 $500 $600 $700 2012 2013 2014 2015 2016 (Dollars in Millions) $115 $132 $309 $513 $637 YOY Growth +24% 39
Slide 40: Equipment Finance
• Examined by Senior Management mid – 2016. • Detailed research conducted and validated by well - respected industry experts. • Strategy to enter space provides further portfolio diversification with assets generally not susceptible to valuation bubbles. • Provides a better set of structured financi
Slide 41: Total Deposits
$0.000 $0.500 $1.000 $1.500 $2.000 $2.500 $3.000 $3.500 $4.000 2012 2013 2014 2015 2016 $2.935 $2.299 $1.647 $1.516 $3.412 Total Deposits YOY Growth +16% (Dollars in Billions) 41
Slide 42: Total Deposit Base Comparison
Total Deposits: $3.412 Billion Total Deposit Base Comparison Non - Interest Bearing Demand Interest Bearing Demand Savings & MMDA Tim e 14.4% 34.2% 35.5% 16.1% 19.6% 45.7% 22.9% 11.8% 12/31/2012 12/31/2016 Total Deposits: $1.516 Billion 42
Slide 43: Enhancing the Client Experience
Despite Transformational Change, We Continue to Enhance the Client Experience Our PGB Experience Score… • Received 1,231 survey responses. • Overall score 52 (national average is 32*); Previous score was 48. • 67% are Promoters: Highly likely to refer PGB. • Primary Reason: Strong relationship with
Slide 44: Targets and outlook
• EPS Growth – High single digit to low double digit EPS growth. • Return on Equity – 10% target run rate by late 2017 / early to mid 2018. • Efficiency Ratio – Targeting low to mid 50’s by early to mid 2018. • Balance Sheet Growth / Loan Growth – 10% to 15% annual balance sheet growth; 12% to 18% a
Slide 45: Select Financial Highlights Q1 2017
Select Financial Highlights Q1 2017 Annual Meeting April 25, 2017 P EAPACK - G LADSTONE B ANK
Slide 46: Wealth Management Fee Income
Wealth Management Fee Income $4.00 $4.10 $4.20 $4.30 $4.40 $4.50 $4.60 $4.70 $4.80 $4.90 $5.00 Q1 2016 Q4 2016 Q1 2017 (in millions) $4.30 $4.61 $4.82 +12% to Q1 2016 46
Slide 47: Wealth Management Assets Under Admin
Wealth Management Assets Under Admin $3.10 $3.20 $3.30 $3.40 $3.50 $3.60 $3.70 $3.80 $3.90 $4.00 Q1 2016 Q4 2016 Q1 2017 (in billions) $3.31 $3.67 $3.76 +14% to Q1 2016 47
Slide 48: Net Interest Income
Net Interest Income $20.00 $21.00 $22.00 $23.00 $24.00 $25.00 $26.00 $27.00 Q1 2016 Q4 2016 Q1 2017 (in millions) $23.41 $24.58 $25.59 +9% to Q1 2016 48
Slide 49: Total Revenue
Total Revenue Diversified Revenue Mix $27.00 $28.00 $29.00 $30.00 $31.00 $32.00 $33.00 $34.00 Q1 2016 Q4 2016 Q1 2017 $29.67 $32.25 $32.61 (in millions) +10% to Q1 2016 49
Slide 50: Efficiency Ratio
Efficiency Ratio* 54.00% 56.00% 58.00% 60.00% 62.00% 64.00% 66.00% 68.00% Q1 2016 Q4 2016 Q1 2017 *Calculated as (total operating expenses) as a percentage of (total revenue less gain on sale of securities and less gain on sal e of loans held for sale at lower cost or fair value – i.e., MF loans). S
Slide 51: Net Income
Net Income $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 Q1 2016 Q4 2016 Q1 2017 Q1 2017 (in millions) $5.49 $7.98 $7.31 $7.32 As Adjusted (A) (A) Q1 2017 included $662 thousand income tax expense benefit related to the application of ASU 2016 - 09, compensation – stock co mpensation (topic 718), improv
Slide 52: Diluted Earnings Per Share
Diluted Earnings Per Share $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 $0.50 Q1 2016 Q4 2016 Q1 2017 Q1 2017 Shares Outstanding for Diluted EPS Q1 2017 17,439,000 Q4 2016 17,070,000 Q1 2016 16,017,000 (A) The quarter ended 03/31/2017 included $662 thousand income tax expense benefit related to t
Slide 53: Return on Average Equity
Return on Average Equity 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% Q1 2016 Q4 2016 Q1 2017 Q1 2017 7.83% 9.27% 9.62% 8.82% As Adjusted (A) +13% to Q1 2016 (A) The quarter ended 03/31/2017 included $662 thousand income tax expense benefit related to the application of ASU 2016 - 09
Slide 54: Total Loans
Total Loans* $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Q1 2016 Q4 2016 Q1 2017 (in billions) *Includes Multifamily Loans Held for Sale $3.07 $3.31 $3.44 +12% to Q1 2016 54
Slide 55: Commercial (C&I) Loans
Commercial (C&I) Loans $400 $450 $500 $550 $600 $650 $700 $750 Q1 2016 Q4 2016 Q1 2017 (in millions) $555 $637 $688 +24% to Q1 2016 55
Slide 56: Total Deposits
Total Deposits $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Q1 2016 Q4 2016 Q1 2017 (in billions) $3.04 $3.41 $3.43 +13% to Q1 2016 56
Slide 57: Non-Performing Assets Ratio
Non - Performing Assets Ratio 0.20% 0.25% 0.30% 0.35% 0.40% Q1 2016 Q4 2016 Q1 2017 0.23% 0.30% 0.31% (NPAs as a % of Assets) 57
Slide 58: Tangible Book Value Per Share
Tangible Book Value Per Share* $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00 $19.00 $20.00 Q1 2016 Q4 2016 Q1 2017 $17.16 $18.60 $19.22 * Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding. See non - GAAP financial measures reconciliati
Slide 59: Regulatory Tier I Leverage Ratio
Regulatory Tier I Leverage Ratio (Regulatory Tangible Capital) 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% Q1 2016 Q4 2016 Q1 2017 Regulatory Well Capitalized Standard 5.00% Regulatory Adequately Capitalized Standard 4.00% 8.19% 8.35% 8.66% 8.14% 9.31% 9.61% Holding Company Bank 59
Slide 60: Regulatory Tier I and II Capital to RWA
8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% Q1 2016 Q4 2016 Q1 2017 Regulatory Well Capitalized Standard 10.00% Regulatory Adequately Capitalized Standard 8.00% 11.57% 13.25% 13.41% 11.50% 12.87% 13.05% Holding Company Bank Regulatory Tier I and II Capital to RWA (Regulatory Total Capital to Risk
Slide 61: Non-GAAP Financial Measures Reconciliation
We believe that these non - GAAP financial measures provide information that is important to investors and that is useful in under standing our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non - GAAP fina
Slide 62: Non-GAAP Financial Measures Reconciliation
We believe that these non - GAAP financial measures provide information that is important to investors and that is useful in under standing our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non - GAAP fina
Slide 63: Non-GAAP Financial Measures Reconciliation
We believe that these non - GAAP financial measures provide information that is important to investors and that is useful in under standing our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non - GAAP fina
Slide 64: Peapack-Gladstone Financial Corporation Q&A
PEAPACK-GLADSTONE FINANCIAL CORPORATION PEAPACK-GLADSTONE BANK Q&A
Peapack-Gladstone Financial — Shareholder Meeting (April 2017) on 6ix