Peapack-gladstone Financial Corporation · NASDAQ:PGC
Peapack-gladstone Financial — Shareholder Meeting (April 2013)
78 slides from Peapack-gladstone Financial's shareholder meeting presentation, Apr 26, 2013
Slide 1: CFO Presentation Jeffrey J. Carfora
CFO Presentation Jeffrey J. Carfora
Slide 2: 2013 Annual Meeting Select Financial Highlights 2012
2013 Annual Meeting Select Financial Highlights 2012
Slide 3: Net Interest Income
2 Net Interest Income $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 $55.0 2011 2012 $48.9 $51.4 (in millions)
Slide 4: PGB Trust & Investments Fee Income
3 PGB Trust & Investments Fee Income $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 $11.0 $12.0 $13.0 2011 2012 $10.7 $12.3 (in millions)
Slide 5: Pre-Tax Income
3 Pre - Tax Income (in millions) $5.0 $7.0 $9.0 $11.0 $13.0 $15.0 $17.0 2011 2012 $14.0 $16.1
Slide 6: Loan Originations
6 Loan Originations $50 $100 $150 $200 $250 $300 $350 $400 $450 2011 2012 $397 (in millions) $321
Slide 7: Mortgage Banking Income
7 • Gain on Loans Sold Mortgage Banking Income $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2011 2012 $502 $1,195 (in thousands)
Slide 8: Total Loans
8 Total Loans $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 2011 2012 (in billions) $1.04 $1.13
Slide 9: Total Deposits
9 Total Deposits $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 2011 2012 CDs Core CDs 86% Core 88% Core $1.52 CDs (in billions) $1.44
Slide 10: Nonperforming Assets
10 Nonperforming Assets $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 2011 2012 (in millions) $26.3 $15.2
Slide 11: Leverage Ratio Regulatory Capital
11 • Leverage Ratio Regulatory Capital 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% Well Capitalized Standard Actual 2012 5.00% 7.27%
Slide 12: Risk Based Ratio Regulatory Capital
12 • Risk Based Ratio Regulatory Capital 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Well Capitalized Standard Actual 2012 10.00% 13.08%
Slide 13: Common Equity Ratio GAAP Capital
13 • Common Equity Ratio GAAP Capital 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 2011 2012 6.81% 7.32%
Slide 14: EPS
14 EPS 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 2011 2012 (in dollars) 1.25 1.05
Slide 15: Q4 2012 Strategic Initiatives
15 Q4 2012 Strategic Initiatives • A pool of classified loans was marketed for sale. The sale closed in Q1 2013. • The Company’s Pooled Trust Preferred Securities portfolio was sold. • All Held To Maturity securities were transferred to Available for Sale.
Slide 16: Q4 2012 Strategic Initiatives
16 Q4 2012 Strategic Initiatives • The organization and set - up of PGB Trust & Investments of Delaware was completed. • Staffing and organizational restructuring was accomplished. • The position of Chairman and CEO was split.
Slide 17: 2013 Annual Meeting Select Financial Highlights Q1 2013
2013 Annual Meeting Select Financial Highlights Q1 2013
Slide 18: Diluted Earnings Per Share
18 • Diluted Earnings Per Share Continued Strong Earnings $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Q1 2012 Q1 2013 $0.30 $0.32
Slide 19: Classified Loan Sale Closed
19 Classified Loan Sale Closed • The sale of the pool of classified loans held for sale as of year end closed in March 2013. • Gain of $309,000 after tax was recorded in Q1.
Slide 20: Total Loans Reach Record Levels
20 • Reach Record Levels Total Loans $1.00 $1.02 $1.04 $1.06 $1.08 $1.10 $1.12 $1.14 $1.16 $1.18 $1.20 Year End 2012 Q1 2013 $1.13 $1.16 (in billions)
Slide 21: Fee Income Improved
21 • Fee Income Improved PGB Trust & Investments Fee Income $2.50 $2.60 $2.70 $2.80 $2.90 $3.00 $3.10 $3.20 $3.30 $3.40 $3.50 Q1 2012 Q1 2013 $3.18 $3.37 (in millions)
Slide 22: Assets Under Administration Reach Record Levels
22 • Assets Under Administration Reach Record Levels PGB Trust & Investments Assets Under Administration $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Q1 2012 Year End 2012 Q1 2013 $2.06 $2.30 $2.54 (in billions)
Slide 23: Mortgage Banking Income More Than Doubles
23 • Mortgage Banking Income More Than Doubles Mortgage Banking Income (Gain on Sale of Originated Loans) $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Q1 2012 Q1 2013 $188 $470 (in thousands)
Slide 24: Reduced Provision for Loan Losses
24 Reduced Provision for Loan Losses $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 Q1 2012 Q1 2013 $1.5 $0.85 (in millions)
Slide 25: Strong Asset Quality Metrics
25 • Non Performing Assets Ratio Strong Asset Quality Metrics 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% Q1 2012 Q1 2013 1.39% 0.94%
Slide 26: Continued Improvement in Common Equity Ratio
26 Continued Improvement in Common Equity Ratio 6.00% 6.50% 7.00% 7.50% 8.00% Year End 2011 Year End 2012 Q1 2013 7.32% 7.62% 6.81%
Slide 27: Continued Improvement in Book Value Per Share
27 Continued Improvement in Book Value Per Share $10.00 $10.50 $11.00 $11.50 $12.00 $12.50 $13.00 $13.50 $14.00 $14.50 $15.00 Q1 2012 Q1 2013 $12.70 $14.05
Slide 28: CEO Presentation Douglas L. Kennedy, CEO
CEO Presentation Douglas L. Kennedy, CEO
Slide 29: Expanding Our Reach
“Expanding Our Reach” Annual Meeting April 23, 2013
Slide 30: Vision Statement
Vision Statement Peapack - Gladstone Bank 2017… A high - performing boutique bank, leaders in wealth, lending and deposit solutions, known nationally for our unparalleled client service, integrity and trust.
Slide 31: Our Five Operating Principles
• Our Five Operating Principles Operating Principles #1 We Operate With the Highest Standards of Professionalism #2 We Put Our Clients First by Consistently Delivering “The Peapack - Gladstone Experience” #3 We Compete to Win #4 We are Fully Invested in Our Community #5 We Operate as One Team
Slide 32: Overview: Our History
Overview Our History • Classic Community Bank Model • Rural Communities & More Simple Times Today • Mature Community Bank Model • Suburban Communities & Great Service Culture • Wealth Management is a Major Differentiator But . . .
Slide 33: Overview: Considerable Headwinds
Overview . . . We Now Face Considerable Headwinds: • Low Rates Pressuring Our Net Interest Margin • Rapidly Evolving Technology is Transforming Our Industry • Compliance Tsunami is Consuming Resources and has Changed Our Cost Structure But We Will Turn T hese Headwinds into Opportunities, and . . .
Slide 34: Overview: Pivot Forward
Overview . . . Pivot Forward by: • Expanding into Middle Market Commercial & Industrial (C&I) Lending • Growing Our Commercial Real Estate (CRE) & Multifamily Lending • Growing Our Trust and Investment Business • Significantly Expanding Our Residential Mortgage Business • Establishing First - Class
Slide 35: Strategy Sits on a Strong Foundation
Overview Our Strategy to Grow Our Businesses Sits on a Strong Foundation. The Four Components of our Foundation are: • Risk Management • Human Resources • Technology • Brand and Marketing
Slide 36: Enterprise Risk Management
• Enterprise Risk Management Strategic Foundation #1 Business & Regulatory Risk Management Requirements Continue to Rise Silo Risk Management Not Up to Task ERM Aggregates Risk in Different Silos Provides Objective Base for Resource Allocation Increases Transparency into Bank - Wide Risk ERM will: •
Slide 37: Enterprise Risk Management Responsibilities
Credit Risk Credit Function Interest Rate Risk Comptroller Function Capital & Liquidity Risk Comptroller Function Compliance & Legal Risk Compliance & Legal Functions & Bank - Wide Counterparty & Operational Risk Bank - Wide Reputation Risk Bank - Wide Strategic Risk Board & Senior Management Risk M
Slide 38: Human Resources: Peapack-Gladstone Experience
• Human Resources Strategic Foundation #2 • Peapack - Gladstone Bank Known for First Class Service • Our DNA • Our Competitive Advantage • Train & Coach to Standardize & Perfect the “Experience” Throughout the Bank • Brand & Market this as “The Peapack - Gladstone Experience” Standardize “The Experi
Slide 39: Human Resources: Recruiting
• Recruiting Human Resources • Our Strategic Plan Calls for 172 New Positions (Excluding Turnover) Over 5 Years, Including : • Commercial Lenders • Deposit Specialists • Wealth Advisors • Recruiting Veteran Talent in these Areas is Key • We Have Hired a Full - Time Recruiter to Research, Find and Re
Slide 40: Human Resources: Culture
• Human Resources Human Resources • Leverage New Talent • Absorb & Integrate Winning Behaviors • Strengthen PGB Culture of Good Manners • Only Courteous Behavior • Foster a Culture of Truth • Share Views Openly • Ongoing Coaching • Strengthen Culture of Teamwork • Teamwork Equals Success Leverage Ne
Slide 41: Training & Coaching: Mindset
• Training & Coaching — Mindset Our Human Resources • Mindset Coaching • Ownership • Accountability • Strategic Commitment • Reinforce with Communication, Performance Management & Incentives • Mindset Coaching Delivery • The Strategic Commitment Group • PGB Management Uninspired Adherence & Complian
Slide 42: Technology Strategic Foundation
• Technology Strategic Foundation #3 Functionality Service Level Agreements (SLA’s) New Initiatives Wealth Retail Commercial Wealth User Group Com. User Group Retail User Group Reliability Foundation • Information Systems is the Foundation of the Bank • Reliability • Functionality • New Initiatives
Slide 43: Brand and Marketing Strategic Foundation
• Define Products & Services for • Wealth • Retail • Commercial • Define Target Client Profiles • Personal • Businesses • Geographic Locations with a Need for Wealth Management Services Define Products & Services • Wealth • Retail • Commercial Define Target Client Profile • Personal • Businesses • G
Slide 44: Brand & Marketing Analytics
• Develop Insights Through Rigorous Analytics • Existing Client Analytics • MCIF • Prospective Client Analytics • Market Research • Market Sentiment Analytics • Marketplace Awareness Studies • Focus Groups • Brand Equity Studies Analytics Existing Client Analytics Prospective Client Analytics Market
Slide 45: Our Sales Force: Expanding Our Reach
• Our Sales Force Expanding Our Reach “Expanding Our Reach” Will Create Four Sales Forces and... • Concierge Banking • Private Banking • Advisory Board • Community Ambassador Group …We Will Selectively Open Private Banking Offices in Contiguous Markets
Slide 46: Our Retail Sales Force
• Our Retail Sales Force • Will Overlay & Sell Though Our Branch Network • Single Point of Contact for Retail, Commercial & Wealth • Every Conversation Anchored in Wealth • Pure Relationship Management • No Administrative Work • New Business Personalities • Concierge Banking Expanding Our Reach Clie
Slide 47: Concierge Banking
• Concierge Banking Expanding Our Reach Robert Buckley, SVP Sales/Product Development Player/Coach Concierge Banker Concierge Banker Concierge Banker Concierge Banker Alternative Delivery Hub Branch Manager Branch Manager Branch Manager Branch Manager Branch Manager Branch Manager Branches Service &
Slide 48: Commercial & Affluent/High Net Worth Sales Force
• Our Commercial & Affluent/ High Net Worth Sales Force • Single Point of Contact • Teams of Three (model) • C&I PB • Wealth PB • Deposit PB • Laser Focus on Relationship Banking • Anchored in Wealth • Private Banking Expanding Our Reach Client • C&I Borrowers • Affluent & HNW Individuals Private Ba
Slide 49: Private Banking: Multi-Generational Approach
• Private Banking - PGB’s Multi - Generational Approach Expanding Our Reach Wealth Creation • Start Up Phase • Cash Secured Lending • Mature/Established • Cash Flow • Asset Based Lending Wealth Planning • Management Succession • Next Generation • Partial Monetization • Leveraged Recapitalization • S
Slide 50: Private Banking Organizational Design
• Flat Organizational Design • Wealth & Treasury Management to Lead • New Business Personalities PB Teams C&I PB M&A Mergers & Acquisitions Deposit PB Wealth PB ABL Asset Based Lending • Private Banking Expanding Our Reach CEO Private Banking Private Banking Teams Advisory Board Community Ambassador
Slide 51: Advisory Board
• Advisory Board Expanding Our Reach • Network of Centers of Influence (COI’s) • Accountants & Lawyers • Reward & Recognition Program • Business Referred & Booked Generates Points • Annual Trip Top Prize Referral Program Drives New Business Reward Feedback Loop COI’s Refer Business
Slide 52: Community Ambassadors
• Community Ambassadors Expanding Our Reach • A Community - Based Referral Program Geared toward Non - COI Market • Cash Incentives Based on Business Booked and Shared Equally with PGB Banker • A nnual Stipend/Not Salaried Employees • Primarily Targeted to B to B Businesses , Retirees & Other Profes
Slide 53: Retail Banking: Yesterday, Today & Tomorrow
• Yesterday, Today & Tomorrow Retail Banking Yesterday • Simple / Reliable • Order - takers • Long Teller Lines Today • Transactions & Advice • Excellent Service • Short/No Teller Lines Tomorrow • Electronic Banking • Branches Shift from Transactions to Advice
Slide 54: Retail Banking Trends
• Trends Retail Banking • Check Volume Declining • Internet & Mobile Replacing Branch Visits • Debit Card Replacing Checks & Cash • Prepaid Cards On Rise • Electronic Payments > 3/4 of Non - Cash Payments 0 10 20 30 40 50 60 70 Checks ACH Credit Card Debit Card Prepaid Card Transactions (Billions) 2
Slide 55: Retail Banking Areas of Focus
Hub & Spoke Branch Model Branch of the Future Virtual Banking Analytics To Succeed in Retail , We will Need to Focus on: • Hub & Spoke Branch Model • Branch of the Future • Virtual Banking • Analytics • Underneath It All — The Peapack - Gladstone Experience • Five Areas of Focus Retail Banking The P
Slide 56: PGB Residential Mortgage: Yesterday, Today & Tomorrow
• Yesterday, Today & Tomorrow PGB Residential Mortgage Yesterday • PGB was Primarily a Residential Lender • We Originated Locally • We Held Our Originations in Portfolio Today • The Mortgage Business is Half Our Loan Portfolio • We Originate Through Much of Central NJ • We Sell a Good Portion of Our
Slide 57: New Products & Capabilities
• Expand Products & Services • I/O LIBOR Jumbo Mortgage Product to Attract and Service New Private Banking Clientele • USDA Rural Housing Loans • NJ Housing Finance Agency Loans • Expand Capabilities • Rate Lock Desk • On - Line Applications New Products I/O LIBOR Jumbo Mortgage Product to Attract a
Slide 58: Middle Market C&I: Yesterday, Today & Tomorrow
• Middle Market C&I: Yesterday, Today & Tomorrow Commercial Yesterday & Today • Practically Non - Existent Tomorrow • Top - Tier C&I Lending Capability • First Class C&I Lender • Leverage C&I to Generate Deposits & Wealth Assets Under Management (AUM)
Slide 59: Emerging Middle Market C&I Trends
• Big Banks Dominate Middle Market C&I Lending • But They Under - Love the Space • Big Bank RM’s have Become “Machines” • Have Personal Brand Equity with Clients • But Big Bank RM’s and Clients are Frustrated • Entrepreneurial Spirit Clashes with Rigid Corporate Structure and Undermines Great Execut
Slide 60: Our Middle Market C&I Opportunity
• Recruit Dissatisfied Big Bank C&I RM’s Who Embrace an Entrepreneurial Opportunity • Seize Currently Underserved $1 - 10 Million Loan Market • Build Multi - Generational Relationships with Attractive All in Returns • Leverage C&I to Drive Wealth AUM & Deposits • Diversify Credit Risk • Reduce Inter
Slide 61: Credit Risk Management — Cont'd
• Credit Risk Management — Cont’d Commercial • We Will Target High Quality Relationships • Strong & Experienced Ownership • Established Business with Competitive Advantage & Barriers to Entry • Solid History of Profitability • Adequate Capital & Liquidity to Endure Bumps in Road • Reasonable Leverag
Slide 62: Credit Risk Management
• Credit Risk Management Commercial • First, We W ill Separate Loan Production from Credit • Production & Credit have been Combined Until Now • This Has Worked in Our Slower - Growth Past • To Ramp Up Growth and Increase Our Rigor Around Credit Risk Management, We Need to Separate the Two CEO Loan P
Slide 63: Credit Risk Management — Cont'd
• Credit Risk Management — Cont’d Commercial CEO Chief Risk Officer Chief Credit Officer Credit Policy, Loan Approval & Portfolio Analytics Senior Managing Underwriter Credit Analysts • Next, We Will Empower Veteran Credit Talent • CEO with 35 Years Experience at Capital One, North Fork & Fleet • NE
Slide 64: CRE & Multifamily: Yesterday, Today & Tomorrow
Yesterday • Classic Community Bank Lending Model • Local & Smaller Loans • Limited Diversification • Riskier Loan Types Today • Diversified Loan Portfolio • Expanded Geography • More Sophisticated Underwriting & RM’s Tomorrow • Best in Class Credit Risk Management • Dynamic & Energized Sales Culture
Slide 65: Emerging CRE & Multifamily Trends
• CMBS Still Out of Play • Continuing Opportunity for Banks • CRE Recovering Slowly • Rents & Vacancies Stabilizing • Demand for High Quality Properties • Multifamily Tailwinds Continue • Low Vacancies • High Demand for Properties • Low Loss Experience • Emerging CRE & Multifamily Trends Commercial
Slide 66: Multifamily Loss Experience
• Multifamily Loss Experience Commercial Multifamily Provides Attractive Through - the - Cycle Returns
Slide 67: Our CRE & Multifamily Opportunity
• PGB Has Solid CRE & Multifamily (MF) Foundation • Access to Additional CRE & MF RM’s • As in C&I, Big Bank CRE & MF Lenders Often Frustrated • Significant Ability to Safely Ramp Up Multifamily • Strong MF RM’s Generate Quality Volume that will Provide Excellent Returns • Our CRE & Multifamily Oppo
Slide 68: Wealth: Yesterday, Today & Tomorrow
• Yesterday, Today & Tomorrow Wealth Yesterday • Lower Margin Business • Lacking Depth in Skill Set • Perceived a Small Player Today • High Margin Business • Improved Skill Sets • A Player in the Wealth Market Place Tomorrow • Significant Growth in Assets Under Management (AUM) • Emphasis on High Ma
Slide 69: Emerging Wealth Trends
• Emerging Wealth Trends Wealth • $1 - 10 Million Investors Feeling Insecure • Years of Poor Financial Results • Yearning for Better Advice & Service • Large Competitors Underserve this Market and Skimp on Advice & Service • Competitor Client Satisfaction Generally Low • Our Affluent Market is Rapid
Slide 70: Our Wealth Opportunity
• Our Wealth Opportunity Wealth • Significant Opportunity to Become a Dominant Player in Deep $1 - 10 Million Market • Significant Wealth Concentration in the $1 - 10 Million Space • This Market is Currently Underserved • We Provide Trust Services • The “Peapack - Gladstone Experience” 0% 10% 20% 30
Slide 71: Our Competitive Advantages
• Our Competitive Advantages Wealth • “The Peapack - Gladstone Experience” • Fiduciary Services • Coordinated Delivery of Skills • Custom Tailored Investment Management • Perfectly Positioned to Dominate $1 - 10 Million Account Space Perfectly Positioned to Dominate $1 - 10 Million Account Space Cus
Slide 72: Liquidity
• Liquidity Liquidity & Capital • The Strategic Plan Calls For Measured and Sustainable Asset Growth • New C&I Loans • New CRE Loans • New Multifamily Loans • New Jumbo Residential Mortgage Loans • Asset Growth Requires Funding • We Have Many Sources of Funding • Core Deposits • Wholesale Funding •
Slide 73: Liquidity: Wholesale Funding & Asset Sales
• Liquidity — Cont’d Liquidity & Capital • Wholesale Funding & Asset Sales — Our Supplemental Funding • Federal Home Loan Bank Advances • Brokered CDs • Non - Brokered CDs • REPO’s • Lines of Credit • Security Sales • Loan Sales Wholesale Funding & Asset Sales FHLB Advances Brokered CDs Non - Broker
Slide 74: Liquidity: Mergers & Acquisitions
• Liquidity — Cont’d Liquidity & Capital • Mergers & Acquisitions Also a Source of Funding • Many Small Banks with Attractive Deposit Franchises • Small Banks Under Significant Operating Pressure • Quick Way to Increase Core Deposits • Liquid Target Balance Sheets Increase M&A Value Attractive Depos
Slide 75: Capital
• Capital Liquidity & Capital • Two Types of Capital • Common • Preferred • Common Equity • The “Best” Capital • Dilution an Issue • Preferred Equity • Second Place to Common • Avoids Dilution • $50MM Shelf Registration Capital Common Preferred
Slide 76: Capital: Four Paths to Acquiring Capital
Operating Profits Public Offering Private Offering Rights Offering • Capital — Cont’d Liquidity & Capital • Four Paths to Acquiring Capital • Operating Profits • Great Capital But Not Enough to Support Our Planned Rate of Growth • Public Offering • Investment Bank & Road Show • Private Offering • Pr
Slide 77: 2013 Strategic Objectives
• At the CEO Level, I have Committed to Delivering Results on Five Key Strategic Imperatives in 2013 • Improve Our Risk Management • Implement Sales Channels • Assess & Fill Gaps in Our Technology Platform • Manage & Invest in Our Human Capital • Deliver Our Plan Improve Our Risk Management Implemen
Slide 78: Q&A
| Expanding Our Reach Q&A
Peapack-Gladstone Financial — Shareholder Meeting (April 2013) on 6ix