Peapack-gladstone Financial Corporation · NASDAQ:PGC
Peapack-gladstone Financial — Jack Henry CEO Conference 2016
33 slides from Peapack-gladstone Financial's conference presentation, Oct 18, 2016
Slide 1: Our Strategy for the Future: Expanding Our Reach
Our Strategy for the Future “Expanding Our Reach” Jack Henry CEO Conference October 18, 2016 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: Historical Milestones
Historical Milestones 3 1921 Converted to Peapack - Gladstone Bank, NJ State Chartered Bank 12/31/2015 Total Bank Assets $3.4B Market Value AUA $3.3B Obtained fiduciary trust powers Established Peapack - Gladstone National Bank Reorganized as Peapack - Gladstone Trust Company Opened branches in neig
Slide 4: Our Foundation: Vision and Core Principles
A high - performing boutique bank, leaders in wealth, lending and deposit solutions, known nationally for our unparalleled client service, integrity and trust. Our Foundation 4 • Professionalism • Clients First • Compete to Win • Invested in Our Community • One Team Vision Core Principles
Slide 5: Overview, Franchise and Financial Highlights
1. Non - GAAP financial measure; refer to reconciliation on page 32 • Headquartered in Bedminster, NJ. • Four Private Banking locations: Bedminster, Morristown, Princeton, Teaneck. • 21 Branches in four affluent New Jersey counties: Somerset, Morris, Hunterdon, Union. • Delaware Trust Subsidiary. •
Slide 6: Market demographics by New Jersey county
1. Rank reflects ranking amongst all New Jersey counties Note: Data is pro forma for pending acquisitions; weighted average is calculated as the sum of (percent of state/national franchise * demographic item) within each market; banks , thrifts , and savings banks included (retail branches only ) So
Slide 7: 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 8: People, Market, Growth and Profitability, Business Model
People Market 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 offers consider
Slide 9: Mitigating Strategic Risk: Ensuring Our Business Remains Relevant
Mitigating Strategic Risk: Ensuring Our Business Remains Relevant 9 Board’s desire to adapt: • Need for scale • Weak share valuation • Lack of revenue growth • Robust headwinds External pressures: • Flat yield curve • Technology • Regulatory and compliance costs Emerging headwinds: • Fintech disrupt
Slide 10: Adverse Interest Rate Environment
Adverse Interest Rate Environment 10 Changes in rates from 2013 to now Index 2013 2014 2015 10/04/16 Fed Funds Target 0.25% 0.25% 0.50% 0.50% 2 Year Treasury 0.33% 0.53% 0.72% 0.82% 10 Year Treasury 2.49% 2.48% 2.15% 1.68% 2 - 10 Year Treasury Spread 2.16% 1.95% 1.43% 0.86% Bank Margins • Th
Slide 11: Technology has Fundamentally Changed Our Business
Technology has Fundamentally Changed Our Business 11 People do not come to branches anymore B ut they continue to want information and advice
Slide 12: Examples of Strategic Risk
Examples of Strategic Risk 12 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
Slide 13: The Traditional Community Banking Model is Dead
The Traditional Community Banking Model is Dead 13 Traditional Model • Historical Perspective • Asset Growth • Transactions • Products/Customers • Advertising • Brick and Mortar • SILO’ s • Single Stress Scenario Plans • Regulatory Constraints • Audit • Board Cronyism • Job Training/Personnel Dept •
Slide 14: The Peapack-Gladstone Private Banking Model
• Full service banking with every conversation aimed at helping clients create , grow , protect and eventually t ransition their wealth. • Deep understanding of our clients needs , goals, and aspirations. - It’s about the client; not a bout us. - Risk management tolerance , time horizon, and other t
Slide 15: Our Strategy is an ongoing journey
15 Our Strategy is an ongoing journey that continually focuses on: Ensuring our Core Principles are ingrained in all staff • Formal training on the operating behaviors necessary to deliver the core principles • Established standard telephone greeting and service protocols utilized throughout the Ban
Slide 16: Perfecting the Client Experience
Perfecting the Client Experience 16 Listening to our Staff and Delivering a Best in Class Employee Experience • Established P.A.C.E. program ( P eapack A lways C aring for E mployees) • We listened and implemented: - Programs to improve communication: strategy presentations, PGB Weekly - Career Deve
Slide 17: Client Analytics
Client Analytics 17 • Salesforce is our centralized repository • Ability to understand client data and established clear understanding of how to use it • Know our top clients and how they expect to be treated • Provide a consistent client experience by delivering meaningful client information to per
Slide 18: The Client Experience Augmented Through Technology
The Client Experience Augmented Through Technology 18 Intelligent t echnology is critical to the client experience • Customized online client portal interaction • Customized ATM experience • Customized call center and support department Interactions • Customized online and mobile banking capabilitie
Slide 19: Our Strategy is Delivering Results
1. Reflects reported net income as per 10 - K; includes $ 2.50 million of pre - tax non - recurring charges related to the closure of two branch offices 2. Reflects reported net income as per 10 - Q; includes $1.90 million of pre - tax charges related to increased FDIC premiums Our Strategy is Deliv
Slide 20: Enviable Revenue Mix
1. Includes SBA Income, SWAP Income, Deposit & Loan Fees, Mortgage Banking, and BOLI Enviable Revenue Mix 76.4% 15.5% 6.4% 0.1% 1 .6% 78.1% 15.7% 5.2% 0.5% 0.5% For the Year Ended December 31, 2015 For the Quarter Ended June 30, 2016 20 Total Fee Income 21.9% of Total Revenue Total Fee Income 23.6%
Slide 21: Wealth Management Overview
Wealth Management Assets Under Admin Wealth Management Fee Income Wealth Management Overview $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 2012 2013 2014 2015 6 Mos Ended 06/30/16 (Dollars in Millions) $2.00 $2.25 $2.50 $2.75 $3.00 $3.25 $3.50 2012 2013 2014 2015 Q2 2016 (Dollars in Billions)
Slide 22: Our Strategy Is Attracting a Higher Value Client
Our Strategy Is Attracting a Higher Value Client Account Type New Accounts Three Years or Less % of Total Outstandings 2016 Legacy Accounts Three Years or More % of Total Outstandings 2016 % Increase in Average Account Size Average Deposit $103,000 53% $31,000 47% 232% Average Loan $1,365,000 58% $2
Slide 23: Positive Operating Leverage & Improved Profitability
1. Revenue defined as net interest income plus all other income 2. Includes $2.50 million of non - recurring charges related to the closure of two branch offices Net Income / Period End FTE Revenue¹ / Period End FTE (Dollars in Thousands) (Dollars in Thousands) Positive Operating Leverage & Improved
Slide 24: Asset Growth is Delivering Scale
Asset Growth is Delivering Scale $0.000 $0.500 $1.000 $1.500 $2.000 $2.500 $3.000 $3.500 $4.000 2012 2013 2014 2015 Q2 2016 (Dollars in Billions) $3.605 24 +14% YOY Annualized Growth $3.365 $2.702 $1.967 $1.668 Year Over Year +25%
Slide 25: Organic Gross Loan Growth
Note: Gross loans include loans held for sale Organic Gross Loan Growth 25 $0.000 $0.500 $1.000 $1.500 $2.000 $2.500 $3.000 $3.500 2012 2013 2014 2015 Q2 2016 $2.997 $2.251 $1.576 $1.153 $3.213 Year Over Year +28% +14% YOY Annualized Growth (Dollars in Billions) Multifamily Commercial & Industrial C
Slide 26: Loan Composition
Gross Loans: $3.213 Billion Loan Composition 06/30/2016 Multifamily Commercial & Industrial CRE Residential, Consumer & Other 48.6% 19.2% 17.9% 14.3% 26 Target: 25% - 30% Target: 15% - 25% Target: 15% - 20% Target: 35% - 45%
Slide 27: Multifamily loan portfolio
Proven track record of providing solid risk - adjusted returns Geographically diversified portfolio – as of June 30, 2016: • New York – 50%; Top Markets – Bronx and Brooklyn • New Jersey – 40%; Top Markets – Hudson, Essex, & Morris/Somerset/Union Counties • Pennsylvania – 10%; Top Markets – Suburban
Slide 28: Credit Metrics and 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 ta ngible common equity and loan loss reserves 3. NCOs/average loans for Q2 2016 reflects q
Slide 29: Commercial & Industrial Loans
Commercial & Industrial Loans $0 $100 $200 $300 $400 $500 $600 2012 2013 2014 2015 06/30/16 (Dollars in Millions) $115 $132 $309 $513 $576 29 +25% YOY Annualized Growth Year Over Year +66%
Slide 30: Deposit Growth
30 $0.000 $0.500 $1.000 $1.500 $2.000 $2.500 $3.000 $3.500 2012 2013 2014 2015 06/30/16 $2.935 $2.299 $1.647 $1.516 $3.109 Deposit Growth Year Over Year +28% +12% YOY Annualized Growth (Dollars in Billions) Noninterest - bearing DDA Interest - bearing Demand Savings & MMDA Time
Slide 31: Core Deposit Base
Total Deposits: $3.109 B illion MRQ Cost of Int. - bearing Deposits: 0.62% MRQ Cost of Total Deposits : 0.53% Core Deposit Base 06/30/2016 Noninterest-bearing Demand Interest-bearing Demand Savings & MMDA Time 35.3% 31.6% 18.0% 15.1% 31
Slide 32: Financial targets and outlook
• EPS Growth – High single digit to low double digit EPS growth. • Return on Equity – 10 %+ target run rate by 2018. • Efficiency Ratio – Low to mid 50’s by 2018. • Balance Sheet Growth / Loan Growth – 10% to 15% balance sheet growth; 12% to 18% loan growth. • Loan Mix – Continued diversification in
Slide 33: Questions
Questions P EAPACK - G LADSTONE B ANK
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