EX-99.1

EX-99.1 2 pgc-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

PEAPACK-GLADSTONE FINANCIAL CORPORATION

REPORTS STRONG THIRD QUARTER RESULTS, AS

NET INTEREST MARGIN CONTINUES TO EXPAND

Bedminster, N.J. – October 27, 2022 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2022 results.

This earnings release should be read in conjunction with the Company’s Q3 2022 Investor Update, 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 $61.91 million, net income of $20.13 million and diluted earnings per share (“EPS”) of $1.09 for the quarter ended September 30, 2022, compared to revenue of $52.99 million, net income of $14.17 million and diluted EPS of $0.74 for the three months ended September 30, 2021.

The Company’s return on average assets, return on average equity, and return on average tangible equity totaled 1.30%, 15.21% and 16.73%, respectively, for the September 2022 quarter.

The September 2022 quarter results were driven by continued improvement in net interest income and net interest margin, which improved $10.3 million and 56 basis points, when compared to the September 2021 quarter (and $2.6 million and 15 basis points when compared to the June 2022 quarter). This benefit was partially offset by a decline in noninterest income, principally wealth management fee income and capital markets activity fee income, due to volatility in the markets.

The September 2022 quarter included a $571,000 fair value adjustment on an equity security held for CRA investment purposes. This adjustment reduced total revenue by $571,000; net income by $414,000; and EPS by $0.03, for the September 2022 quarter.

Douglas L. Kennedy, President and CEO said, “Our third quarter 2022 results continued to reflect the asset sensitivity of our loan portfolio, as loans continued to reprice upward in the rising rate environment.”

Mr. Kennedy also noted, "As previously announced, the Company has entered the Life Insurance Premium Finance business. Life insurance premium finance is a safe and profitable business, and we believe it is the next logical step in our growth plan. While Q4 of 2022 will include some level of loan originations, the business is expected to be fully operational at the beginning of 2023."

The following are select highlights:

Peapack Private Wealth Management:

•

AUM/AUA in our Peapack Private Wealth Management Division totaled $9.3 billion at September 30, 2022.

•

Gross new business inflows for Q3 2022 totaled $219 million (and for the first nine months of 2022 totaled $775 million).

•

Wealth Management fee income of $12.9 million for Q3 2022 comprised 21% of total revenue for the quarter.

•

Successfully opened our new Summit Wealth Management office, which has consolidated the teams of several previously acquired firms with legacy Peapack Private team members.

Commercial Banking and Balance Sheet Management:

•

The net interest margin ("NIM") improved by 15 basis points in Q3 2022 compared to Q2 2022 and improved 56 basis points when compared to Q3 2021.

•

During the third quarter of 2022, the Company successfully migrated $287 million of interest-bearing checking into noninterest-bearing demand deposits.

•

Noninterest-bearing demand deposits comprised 25% of total deposits as of September 30, 2022.

•

Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 91% of total deposits at September 30, 2022.

•

Commercial & industrial lending (“C&I”) loan/lease balances comprised 40% of the total loan portfolio at September 30, 2022.

•

Total loans grew 7% (9% annualized) to $5.19 billion at September 30, 2022 compared to $4.84 billion at December 31, 2021.

•

Fee income on unused commercial lines of credit totaled $818,000 for Q3 2022.

Capital Management:

•

Repurchased 290,399 shares of Company stock for a total cost of $9.9 million during Q3 2022. (790,277 shares of Company stock for a total cost of $27.5 million were repurchased during the first nine months of 2022.)

•

At September 30, 2022, Regulatory Tier 1 Leverage Ratio stood at 10.8% for Peapack-Gladstone Bank (the "Bank") and 8.7% for the Company; and Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.5% for the Bank and 10.9% for the Company. These ratios have increased from June 30, 2022 levels (and from December 31, 2021 levels) and are significantly above well capitalized standards, as capital has benefitted from strong net income generation.

SUMMARY INCOME STATEMENT DETAILS:

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

September 2022 Year Compared to Prior Year


	Nine Months Ended			Nine Months Ended
	September 30,			September 30,			Increase/
(Dollars in millions, except per share data)	2022			2021			(Decrease)
Net interest income	$	128.04		$	100.85		$	27.19		27	%
Wealth management fee income (A)		41.67			39.03			2.64		7
Capital markets activity (B)		8.30			7.10			1.20		17
Other income (C)		(0.36	)		7.15			(7.51	)	(105	)
Total other income		49.61			53.28			(3.67	)	(7	)
Operating expenses (A) (D)		100.39			94.46			5.93		6
Pretax income before provision for credit losses		77.26			59.67			17.59		29
Provision for credit losses		4.42			2.73			1.69		62
Pretax income		72.84			56.94			15.90		28
Income tax expense/(benefit)		19.17			15.17			4.00		26
Net income	$	53.67		$	41.77		$	11.90		28	%
Diluted EPS	$	2.88		$	2.15		$	0.73		34	%

Total Revenue (E)	$	177.65		$	154.13		$	23.52		15	%

Return on average assets annualized		1.16	%		0.94	%		0.22
Return on average equity annualized		13.46	%		10.43	%		3.03

(A) The nine months ended September 30, 2022 included nine months of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group, while the nine months ended September 30, 2021 included three months.

(B) Capital markets activity includes fee income from loan level back-to-back swaps, the Small Business Association ("SBA") lending and sale program, corporate advisory and mortgage banking activities.

(C) Other income for the nine months ended September 30, 2022 included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the first quarter of 2022, and a $1.7 million fair value adjustment on a CRA equity security. The September 2021 nine months included a cost of $842,000 related to the termination of interest rate swaps; a $1.4 million gain on loans; $722,000 of fee income related to the referral of Paycheck Protection Program ("PPP") loans to a third party; $455,000 of additional Bank Owned Life Insurance ("BOLI") income related to the receipt of life insurance proceeds; and a $293,000 fair value adjustment on a CRA equity security.

(D) The nine months ended September 2022 and 2021 each included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank. The nine months ended September 2021 also included $648,000 of expense related to the redemption of subordinated debt; and $1.4 million related to a swap valuation allowance.

(E) Total revenue equals the sum of net interest income plus total other income.

September 2022 Quarter Compared to Prior Year Quarter


	Three Months Ended			Three Months Ended
	September 30,			September 30,			Increase/
(Dollars in millions, except per share data)	2022			2021			(Decrease)
Net interest income	$	45.53		$	35.21		$	10.32		29	%
Wealth management fee income		12.94			13.86			(0.92	)	(7	)
Capital markets activity (A)		0.78			2.06			(1.28	)	(62	)
Other income (B)		2.66			1.86			0.80		43
Total other income		16.38			17.78			(1.40	)	(8	)
Operating expenses (C)		33.56			32.18			1.38		4
Pretax income before provision for credit losses		28.35			20.81			7.54		36
Provision for credit losses		0.60			1.60			(1.00	)	(63	)
Pretax income		27.75			19.21			8.54		44
Income tax expense		7.62			5.04			2.58		51
Net income	$	20.13		$	14.17		$	5.96		42	%
Diluted EPS	$	1.09		$	0.74		$	0.35		48	%

Total Revenue (D)	$	61.91		$	52.99		$	8.92		17	%

Return on average assets annualized		1.30	%		0.95	%		0.35
Return on average equity annualized		15.21	%		10.40	%		4.81

(A) Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.

(B) Other income for the September 2022 and 2021 quarters included a fair value adjustment on a CRA equity security of $571,000 and $70,000, respectively

(D) Total revenue equals the sum of net interest income plus total other income.

September 2022 Quarter Compared to Linked Quarter


	Three Months Ended			Three Months Ended
	September 30,			June 30,			Increase/
(Dollars in millions, except per share data)	2022			2022			(Decrease)
Net interest income	$	45.53		$	42.89		$	2.64		6	%
Wealth management fee income		12.94			13.89			(0.95	)	(7	)
Capital markets activity (A)		0.78			2.86			(2.08	)	(73	)
Other income (B)		2.66			1.76			0.90		51
Total other income		16.38			18.51			(2.13	)	(12	)
Operating expenses		33.56			32.66			0.90		3
Pretax income before provision for credit losses		28.35			28.74			(0.39	)	(1	)
Provision for credit losses		0.60			1.45			(0.85	)	(59	)
Pretax income		27.75			27.29			0.46		2
Income tax expense		7.62			7.19			0.43		6
Net income	$	20.13		$	20.10		$	0.03		0	%
Diluted EPS	$	1.09		$	1.08		$	0.01		1	%

Total Revenue (C)	$	61.91		$	61.40		$	0.51		1	%

Return on average assets annualized		1.30	%		1.30	%		0.00
Return on average equity annualized		15.21	%		15.43	%		(0.22	)

(A) Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.

(B) Other income for the September 2022 and June 2022 quarters included a fair value adjustment on a CRA equity security of $571,000 and $475,000, respectively.

SUPPLEMENTAL QUARTERLY DETAILS:

Peapack Private Wealth Management

In the September 2022 quarter, the Bank’s wealth management business, Peapack Private Wealth Management ("PPWM"), generated $12.94 million in fee income, compared to $13.89 million for the June 30, 2022 quarter and $13.86 million for the September 2021 quarter. Continued market declines in 2022 further impacted the results in the September 2022 quarter, as the S&P decreased another 5% in Q3 2022 (and YTD down 25%).

John Babcock, President of Peapack Private Wealth Management noted, “Notwithstanding broad market forces that have negatively impacted both the equities and bond markets, and with economic challenges ahead, our business is sound and continues to attract new clients as well as additional funds from existing relationships. In Q3 2022, total new accounts and client additions totaled $219 million which brings our nine-month 2022 total to $775 million, an annualized pace consistent with the last several years. As we enter Q4 2022, our new business pipeline is healthy, and we remain focused on delivering excellent service and advice to our clients during these turbulent times. Our highly skilled professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes PPWM in our market and are the drivers behind our growth and success.”

Loans / Commercial Banking

Total loans grew 7% (9% annualized) to $5.19 billion at September 30, 2022 compared to $4.84 billion at December 31, 2021.

Total C&I loans and leases at September 30, 2022 were $2.10 billion or 40% of the total loan portfolio.

Mr. Kennedy noted, “Our loan growth has historically been strong however, given economic uncertainty and rising interest rates, we believe loan demand will subside somewhat. Further, we have tightened our initial underwriting in anticipation of a potential economic downturn and higher rate environment. Given that, we believe we will achieve modest growth for the remainder of 2022, resulting in mid to high single digit growth for all of 2022.”

Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, and Corporate Advisory and SBA businesses. Additionally, we are encouraged by the expansion into the Life Insurance Premium Finance business and believe it will prove to be a safe and profitable business line that aligns with the Company's strategy.”

Net Interest Income (NII)/Net Interest Margin (NIM)


	Nine Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2021
	NII		NIM	NII			NIM

NII/NIM excluding the below	$	126,643	2.84%	$	97,655		2.53%
Prepayment premiums received on loan paydowns		912	0.02%		1,530		0.03%
Effect of maintaining excess interest earning cash		485	-0.03%		(365	)	-0.17%
Effect of PPP loans		—	0.00%		2,029		-0.04%
NII/NIM as reported	$	128,040	2.83%	$	100,849		2.35%

	Three Months Ended			Three Months Ended				Three Months Ended
	September 30, 2022			June 30, 2022				September 30, 2021
	NII		NIM	NII			NIM	NII			NIM

NII/NIM excluding the below	$	44,728	2.99%	$	42,526		2.83%	$	34,635		2.56%
Prepayment premiums received on loan paydowns		305	0.02%		255		0.02%		325		0.02%
Effect of maintaining excess interest earning cash		492	-0.03%		112		-0.02%		(46	)	-0.14%
Effect of PPP loans		—	0.00%		—		0.00%		297		-0.02%
NII/NIM as reported	$	45,525	2.98%	$	42,893		2.83%	$	35,211		2.42%

The Company’s reported NII and NIM for Q3 2022 increased $2.6 million and 15 basis points, respectively, compared to the linked quarter (Q2 2022) and $10.3 million and 56 basis points compared to the prior year quarter (Q3 2021). When comparing to the prior year quarter the Bank grew its loan portfolio at rates/spreads beneficial to NIM, while reducing lower-yielding liquidity. Additionally, the Bank benefitted from the increases in LIBOR and the Prime rate during 2022.

Mr. Kennedy stated, “As noted above, we benefitted from the increases in LIBOR and Prime during 2022 and our loan portfolio is positioned to continue to benefit from a rise in interest rates. 23% of our loan portfolio reprices within one-month; 36% within three-months and 46% ($2.4 billion) within one year. Our current modeling, with an average deposit beta assumption of 45% on a go-forward basis, indicates net interest income will improve approximately 2.2% in year one and 5.8% in year two, after a 150-basis point rate shock.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale funding, volatility, and/or operational risk. Total deposits increased $33 million to $5.30 billion at September 30, 2022 from $5.27 billion at December 31, 2021 and decreased $105 million from $5.40 billion at June 30, 2022. The deposit outflows for the quarter included large relationships strategically utilizing their funds, including investing into our Wealth Management business, acquisitions, further investing in their business, and purchasing real estate and other investments. As noted previously, during the third quarter of 2022, the Company successfully migrated $287 million of interest-bearing checking into noninterest-bearing demand deposits.

Mr. Kennedy noted, “91% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 25% of our total deposits; both metrics reflect the core nature of our deposit base.”

At September 30, 2022, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $634.1 million (or 10% of assets).

The Company maintains backup liquidity of approximately $1.8 billion of secured available funding with the Federal Home Loan Bank and $1.7 billion of secured funding from the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $784,000 for the September 2022 quarter compared to $2.86 million for the June 2022 quarter and $2.06 million for the September 2021 quarter. The June 2022 quarter results were driven by $2.68 million in gains on sales of SBA loans. The September 2021 quarter reflected $1.57 million in gains on the sale of SBA loans and increased mortgage banking activity due to greater refinance activity in the low-rate environment.


	Nine Months Ended		Nine Months Ended
	September 30,		September 30,
(Dollars in thousands, except per share data)	2022		2021
Gain on loans held for sale at fair value (Mortgage banking)	$	458	$	1,842
Fee income related to loan level, back-to-back swaps		—		—
Gain on sale of SBA loans		6,141		3,950
Corporate advisory fee income		1,696		1,303
Total capital markets activity	$	8,295	$	7,095

	Three Months Ended		Three Months Ended		Three Months Ended
	September 30,		June 30,		September 30,
(Dollars in thousands, except per share data)	2022		2022		2021
Gain on loans held for sale at fair value (Mortgage banking)	$	60	$	151	$	408
Fee income related to loan level, back-to-back swaps		—		—		—
Gain on sale of SBA loans		622		2,675		1,569
Corporate advisory fee income		102		33		84
Total capital markets activity	$	784	$	2,859	$	2,061

Other Noninterest Income (other than Wealth Management fee income and Income from Capital Markets Activities)

Other noninterest income was $2.66 million for Q3 2022 compared to $1.76 million for Q2 2022 and $1.86 million for Q3 2021. Q3 2022 included $818,000 of unused line fees compared to $529,000 for Q2 2022 and $163,000 for Q3 2021. Additionally, Q3 2022 included $547,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees.

Operating Expenses

The Company’s total operating expenses were $33.56 million for the quarter ended September 30, 2022, compared to $32.66 million for the June 2022 quarter and $32.19 million for the September 2021 quarter. The 2022 quarters included increased costs related to health insurance and corporate insurance, as well as normal annual merit increases and year-end bonuses. The September 2021 quarter included $1.4 million related to a swap valuation allowance.

Mr. Kennedy noted, “While we continue to manage expenses closely and prudently, we have and will continue to invest in our existing people as the market demands in order to retain the talent we have acquired. We will

also grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs, and invest in digital enhancements to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended September 30, 2022 was 27.47%, as compared to 26.35% for the June 2022 quarter and 26.22% for the quarter ended September 30, 2021, reflecting higher pre-tax income.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $15.8 million, or 0.26% of total assets at September 30, 2022. Loans past due 30 to 89 days and still accruing were $7.2 million, which included a $5.1 million outstanding loan to a US governmental unit.

Criticized and classified loans totaled $109.6 million at September 30, 2022, reflecting declines from both December 31, 2021 and June 30, 2022 levels.

The Company currently has no loans or leases on deferral and accruing. (During the COVID-19 pandemic, $914 million was on deferral status at June 30, 2020).

On January 1, 2022, the Company implemented Current Expected Credit Losses (“CECL”) methodology for calculating the Company’s Allowance for Credit Losses (“ACL”). The day one CECL adjustment totaled $5.5 million (a reduction to December 31, 2021 ACL, and benefit to Capital, net of tax effect).

For the quarter ended September 30, 2022, the Company’s provision for credit losses was $599,000 compared to $1.4 million for the June 2022 quarter and $1.6 million for the September 2021 quarter. The provision for credit losses in the September 2022 was lower, when compared to the June 2022 and September 2021 quarters, principally driven by modest loan growth when compared to prior periods.

At September 30, 2022, the ACL was $59.68 million (1.15% of total loans), compared to $59.02 million (1.14% of loans) at June 30, 2022. The ALLL at December 31, 2021 (before adoption of CECL) was $61.70 million (1.27% of loans).

Capital

The Company’s capital position during the September 2022 quarter was benefitted by net income of $20.13 million which was partially offset by the repurchase of 290,399 shares through the Company’s stock repurchase program at a total cost of $9.9 million and the quarterly dividend of $909,000. U.S. Generally Accepted Accounting Principles (“GAAP”) Capital at September 30, 2022 was also impacted by a $23.6 million increase in the unrealized loss on available-for-sale securities in the third quarter of 2022 due to the significant rise in medium-term Treasury yields.

Mr. Kennedy noted, “Despite capital spent on stock repurchases, and capital being affected by the increased unrealized loss on AFS securities, our tangible book value per share improved slightly during Q3 2022 to $26.10 at September 30, 2022.”

The Company’s and Bank’s regulatory capital ratios as of September 30, 2022 remain strong, and reflect increases from June 30, 2022 and December 31, 2021 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test (as of June 30, 2022), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period. With an additional stress overlay (impacting the industries most affected by the Pandemic more severely), the Bank still remains well capitalized over the two-year stress period.

On October 27, 2022, the Company declared a cash dividend of $0.05 per share payable on November 28, 2022, to shareholders of record on November 10, 2022.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.1 billion and assets under management/administration of $9.3 billion as of September 30, 2022. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers. Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy. Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service. Visit www.pgbank.com and www.peapackprivate.com for more information.

The foregoing may contain 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 confidence and strategies and management’s expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect,” “look,” “believe,” “anticipate,” “may” or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to:

•

our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;

•

the impact of anticipated higher operating expenses in 2022 and beyond;

•

our ability to successfully integrate wealth management firm acquisitions;

•

our ability to manage our growth;

•

our ability to successfully integrate our expanded employee base;

•

an unexpected decline in the economy, in particular in our New Jersey and New York market areas;

•

declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;

•

declines in the value in our investment portfolio;

•

impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;

•

the continuing impact of the COVID-19 pandemic on our business and results of operation;

•

higher than expected increases in our allowance for credit losses;

•

higher than expected increases in loan and lease losses or in the level of delinquent, nonperforming, classified and criticized loans;

•

inflation and changes in interest rates, which may adversely impact or margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;

•

decline in real estate values within our market areas;

•

legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;

•

successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;

•

higher than expected FDIC insurance premiums;

•

adverse weather conditions;

•

the current or anticipated impact of military conflict, terrorism or other geopolitical events;

•

our inability to successfully generate new business in new geographic markets;

•

a reduction in our lower-cost funding sources;

•

our inability to adapt to technological changes;

•

claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;

•

our inability to retain key employees;

•

demands for loans and deposits in our market areas;

•

adverse changes in securities markets;

•

changes in accounting policies and practices; and

•

other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2021. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

(Tables to follow)

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)


	For the Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
	2022			2022			2022			2021			2021
Income Statement Data:
Interest income	$	55,013		$	48,520		$	44,140		$	42,075		$	40,067
Interest expense		9,488			5,627			4,518			4,863			4,856
Net interest income		45,525			42,893			39,622			37,212			35,211
Wealth management fee income		12,943			13,891			14,834			13,962			13,860
Service charges and fees		1,060			1,063			952			996			959
Bank owned life insurance		299			310			313			308			311
Gain on loans held for sale at fair value (Mortgage banking) (A)		60			151			247			352			408
Gain/(loss) on loans held for sale at lower of cost or fair value		—			—			—			(265	)		—
Fee income related to loan level, back-to-back swaps (A)		—			—			—			—			—
Gain on sale of SBA loans (A)		622			2,675			2,844			989			1,569
Corporate advisory fee income (A)		102			33			1,561			2,180			84
Other income		1,868			860			1,254			581			660
Loss on securities sale, net (B)		—			—			(6,609	)		—			—
Fair value adjustment for CRA equity security		(571	)		(475	)		(682	)		(139	)		(70	)
Total other income		16,383			18,508			14,714			18,964			17,781
Salaries and employee benefits (C)		22,656			21,882			22,449			20,105			19,859
Premises and equipment		4,534			4,640			4,647			4,519			4,459
FDIC insurance expense		510			503			471			402			555
Swap valuation allowance		—			—			673			893			1,350
Other expenses		5,860			5,634			5,929			5,785			5,962
Total operating expenses		33,560			32,659			34,169			31,704			32,185
Pretax income before provision for credit losses		28,348			28,742			20,167			24,472			20,807
Provision for credit losses (D)		599			1,449			2,375			3,750			1,600
Income before income taxes		27,749			27,293			17,792			20,722			19,207
Income tax expense		7,623			7,193			4,351			5,867			5,036
Net income	$	20,126		$	20,100		$	13,441		$	14,855		$	14,171

Total revenue (E)	$	61,908		$	61,401		$	54,336		$	56,176		$	52,992
Per Common Share Data:
Earnings per share (basic)	$	1.11		$	1.10		$	0.73		$	0.80		$	0.76
Earnings per share (diluted)		1.09			1.08			0.71			0.78			0.74
Weighted average number of common shares outstanding:
Basic		18,072,385			18,325,605			18,339,013			18,483,268			18,763,316
Diluted		18,420,661			18,637,340			18,946,683			19,070,594			19,273,831
Performance Ratios:
Return on average assets annualized (ROAA)		1.30	%		1.30	%		0.87	%		0.96	%		0.95	%
Return on average equity annualized (ROAE)		15.21	%		15.43	%		9.88	%		10.94	%		10.40	%


Return on average tangible common equity (ROATCE) (F)	16.73	%	17.00	%	10.85	%	12.03	%	11.43	%
Net interest margin (tax-equivalent basis)	2.98	%	2.83	%	2.69	%	2.46	%	2.42	%
GAAP efficiency ratio (G)	54.21	%	53.19	%	62.88	%	56.44	%	60.74	%
Operating expenses / average assets annualized	2.17	%	2.11	%	2.22	%	2.05	%	2.16	%

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.

(B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.

(D) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(E) Total revenue equals the sum of net interest income plus total other income.

(F) Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.

(G) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)


	For the Nine Months Ended
	Sept 30,						Change
	2022			2021			$			%
Income Statement Data:
Interest income	$	147,673		$	117,992		$	29,681			25	%
Interest expense		19,633			17,143			2,490			15	%
Net interest income		128,040			100,849			27,191			27	%
Wealth management fee income		41,668			39,025			2,643			7	%
Service charges and fees		3,075			2,701			374			14	%
Bank owned life insurance		922			1,388			(466	)		-34	%
Gain on loans held for sale at fair value (Mortgage banking) (A)		458			1,842			(1,384	)		-75	%
Gain on loans held for sale at lower of cost or fair value (B)		—			1,407			(1,407	)		-100	%
Fee income related to loan level, back-to-back swaps (A)		—			—			—		N/A
Gain on sale of SBA loans (A)		6,141			3,950			2,191			55	%
Corporate advisory fee income (A)		1,696			1,303			393			30	%
Loss on swap termination		—			(842	)		842			-100	%
Other income (C)		3,982			2,798			1,184			42	%
Loss on securities sale, net (D)		(6,609	)		—			(6,609	)	N/A
Fair value adjustment for CRA equity security		(1,728	)		(293	)		(1,435	)		490	%
Total other income		49,605			53,279			(3,674	)		-7	%
Salaries and employee benefits (E)		66,987			61,759			5,228			8	%
Premises and equipment		13,821			12,646			1,175			9	%
FDIC insurance expense		1,484			1,669			(185	)		-11	%
Swap valuation allowance		673			1,350			(677	)		-50	%
Other expenses		17,423			17,039			384			2	%
Total operating expenses		100,388			94,463			5,925			6	%
Pretax income before provision for credit losses		77,257			59,665			17,592			29	%
Provision for credit losses (F)		4,423			2,725			1,698			62	%
Income before income taxes		72,834			56,940			15,894			28	%
Income tax expense		19,167			15,173			3,994			26	%
Net income	$	53,667		$	41,767		$	11,900			28	%

Total revenue (G)	$	177,645		$	154,128		$	23,517			15	%
Per Common Share Data:
Earnings per share (basic)	$	2.94		$	2.21		$	0.73			33	%
Earnings per share (diluted)		2.88			2.15			0.73			34	%
Weighted average number of common shares outstanding:
Basic		18,244,691			18,891,601			(646,910	)		-3	%
Diluted		18,652,042			19,390,522			(738,480	)		-4	%
Performance Ratios:
Return on average assets annualized (ROAA)		1.16	%		0.94	%		0.22	%		23	%
Return on average equity annualized (ROAE)		13.46	%		10.43	%		3.03	%		29	%
Return on average tangible common equity (ROATCE) (H)		14.81	%		11.40	%		3.41	%		30	%
Net interest margin (tax-equivalent basis)		2.83	%		2.35	%		0.48	%		21	%
GAAP efficiency ratio (I)		56.51	%		61.29	%		(4.78	)%		-8	%
Operating expenses / average assets annualized		2.17	%		2.12	%		0.05	%		2	%

(B) Includes gain on sale of $57 million of PPP loans completed in the nine months ended September 30, 2021.

(C) Includes income of $722,000 from the referral of PPP loans to a third-party firm during the nine months ended September 30, 2021.

(D) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.

(E) The September 2022 and 2021 nine months ended each included $1.5 million of severance expense related to corporate restructuring.

(F) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(G) Total revenue equals the sum of net interest income plus total other income.

(H) Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.

(I) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)

(Unaudited)


	As of
	Sept 30,		June 30,		March 31,		Dec 31,		Sept 30,
	2022		2022		2022		2021		2021
ASSETS
Cash and due from banks	$	5,066	$	6,203	$	8,849	$	5,929	$	9,299
Federal funds sold		—		—		—		—		—
Interest-earning deposits		103,214		147,222		105,111		140,875		606,913
Total cash and cash equivalents		108,280		153,425		113,960		146,804		616,212
Securities available for sale		497,880		556,791		601,163		796,753		843,779
Securities held to maturity		103,551		105,048		106,816		108,680		—
CRA equity security, at fair value		12,957		13,528		14,003		14,685		14,824
FHLB and FRB stock, at cost (A)		14,986		13,710		18,570		12,950		12,950

Residential mortgage		519,088		512,341		513,289		501,340		510,878
Multifamily mortgage		1,856,675		1,876,783		1,850,097		1,595,866		1,497,683
Commercial mortgage		638,903		657,812		669,899		662,626		680,107
Commercial and industrial loans		2,099,917		2,048,474		2,041,720		2,009,252		1,833,532
Consumer loans		37,412		37,675		35,322		33,687		30,689
Home equity lines of credit		36,375		36,023		38,604		40,803		42,512
Other loans		259		236		226		238		245
Total loans		5,188,629		5,169,344		5,149,157		4,843,812		4,595,646
Less: Allowances for credit losses (B)		59,683		59,022		58,386		61,697		65,133
Net loans		5,128,946		5,110,322		5,090,771		4,782,115		4,530,513

Premises and equipment		23,781		22,804		22,960		23,044		23,123
Other real estate owned		116		116		—		—		—
Accrued interest receivable		17,816		23,468		22,890		21,589		22,790
Bank owned life insurance		47,072		46,944		46,805		46,663		46,510
Goodwill and other intangible assets		47,698		48,082		48,471		48,902		49,333
Finance lease right-of-use assets		3,021		3,209		3,395		3,582		3,769
Operating lease right-of-use assets		13,404		14,192		14,725		9,775		10,307
Due from brokers (C)		—		—		120,245		—		—
Other assets (D)		67,753		39,528		30,890		62,451		66,175
TOTAL ASSETS	$	6,087,261	$	6,151,167	$	6,255,664	$	6,077,993	$	6,240,285

LIABILITIES
Deposits:
Noninterest-bearing demand deposits	$	1,317,954	$	1,043,225	$	1,023,208	$	956,482	$	986,765
Interest-bearing demand deposits		2,149,629		2,456,988		2,362,987		2,287,894		2,355,892
Savings		166,821		168,441		162,116		154,914		168,831
Money market accounts		1,178,112		1,217,516		1,304,017		1,307,051		1,287,686
Certificates of deposit – Retail		345,047		375,387		384,909		409,608		426,981
Certificates of deposit – Listing Service		30,647		31,348		31,348		31,382		31,382
Subtotal “customer” deposits		5,188,210		5,292,905		5,268,585		5,147,331		5,257,537
IB Demand – Brokered		85,000		85,000		85,000		85,000		85,000
Certificates of deposit – Brokered		25,974		25,963		33,831		33,818		33,804
Total deposits		5,299,184		5,403,868		5,387,416		5,266,149		5,376,341
Short-term borrowings		32,369		—		122,085		—		—
Paycheck Protection Program Liquidity Facility (E)		—		—		—		—		48,496
Finance lease liability		5,003		5,305		5,573		5,820		6,063
Operating lease liability		14,101		14,756		15,155		10,111		10,644
Subordinated debt, net		132,916		132,844		132,772		132,701		132,629
Other liabilities (D)		88,174		74,070		69,237		116,824		123,098
TOTAL LIABILITIES		5,571,747		5,630,843		5,732,238		5,531,605		5,697,271
Shareholders’ equity		515,514		520,324		523,426		546,388		543,014
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY	$	6,087,261	$	6,151,167	$	6,255,664	$	6,077,993	$	6,240,285
Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions)	$	9.3	$	9.5	$	10.7	$	11.1	$	10.3

(A) FHLB means "Federal Home Loan Bank" and FRB means "Federal Reserve Bank."

(B) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(C) Includes $120 million due from FHLB related to securities sales at March 31, 2022. The $120 million received on April 1, 2022, was used to reduce short term borrowings.

(D) 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.

(E) Represents funding provided by the Federal Reserve for pledged PPP loans.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)


	As of
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
	2022			2022			2022			2021			2021
Asset Quality:
Loans past due over 90 days and still accruing	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans		15,724			15,078			15,884			15,573			25,925
Other real estate owned		116			116			—			—			—
Total nonperforming assets	$	15,840		$	15,194		$	15,884		$	15,573		$	25,925

Nonperforming loans to total loans		0.30	%		0.29	%		0.31	%		0.32	%		0.56	%
Nonperforming assets to total assets		0.26	%		0.25	%		0.25	%		0.26	%		0.42	%

Performing TDRs (A)(B)	$	2,761		$	2,272		$	2,375		$	2,479		$	416

Loans past due 30 through 89 days and still accruing (C)	$	7,248		$	3,126		$	606		$	8,606		$	1,193

Loans subject to special mention	$	82,107		$	98,787		$	110,252		$	116,490		$	115,935

Classified loans	$	27,507		$	27,167		$	47,386		$	50,702		$	51,937

Impaired loans	$	13,047		$	13,227		$	16,147		$	18,052		$	26,341

Allowance for credit losses ("ACL"):
Beginning of quarter	$	59,022		$	58,386		$	61,697		$	65,133		$	63,505
Day one CECL adjustment		—			—			(5,536	)		—			—
Provision for credit losses (D)		665			646			2,489			3,750			1,600
(Charge-offs)/recoveries, net		(4	)		(10	)		(264	)		(7,186	)		28
End of quarter	$	59,683		$	59,022		$	58,386		$	61,697		$	65,133

ACL to nonperforming loans		379.57	%		391.44	%		367.58	%		396.18	%		251.24	%
ACL to total loans		1.15	%		1.14	%		1.13	%		1.27	%		1.42	%
General ACL to total loans (E)		1.10	%		1.09	%		1.09	%		1.19	%		1.26	%

(A) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.

(B) Excludes TDRs included in nonaccrual loans in the following amounts: $12.9 million at September 30, 2022; $13.5 million at June 30, 2022; $13.6 million at March 31, 2022; $1.1 million at December 31, 2021 and $4.0 million at September 30, 2021.

(C) Includes $5.1 million outstanding to a U.S. governmental unit at September 30, 2022; and $6.9 million for one equipment lease principally due to administrative issues with the servicer and the lessee/borrower at December 31, 2021.

(D) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to roll forward the ACL excludes a credit of $66,000 at September 30, 2022, a provision of $803,000 at June 30, 2022 and a credit of $114,000 at March 31, 2022 related to off-balance sheet commitments.

(E) Total ACL less specific reserves equals general ACL.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)


	As of
	September 30,				December 31,				September 30,
	2022				2021				2021
Capital Adequacy
Equity to total assets (A)			8.47	%			8.99	%			8.70	%
Tangible equity to tangible assets (B)			7.75	%			8.25	%			7.97	%
Book value per share (C)		$	28.77			$	29.70			$	29.15
Tangible book value per share (D)		$	26.10			$	27.05			$	26.50

Tangible equity to tangible assets excluding other comprehensive loss*			8.88	%			8.44	%			8.11	%
Tangible book value per share excluding other comprehensive loss*		$	30.29			$	27.72			$	26.99

*Excludes other comprehensive loss of $75.0 million for the quarter ended September 30, 2022, $12.4 million for the quarter ended December 31, 2021, and $9.0 million for the quarter ended September 30, 2021.


	As of
	September 30,			December 31,			September 30,
	2022			2021			2021
Regulatory Capital – Holding Company
Tier I leverage	$	540,464	8.70%	$	508,231	8.29%	$	501,188	8.56%
Tier I capital to risk-weighted assets		540,464	10.86		508,231	10.62		501,188	10.97
Common equity tier I capital ratio to risk-weighted assets		540,440	10.86		508,207	10.62		501,159	10.97
Tier I & II capital to risk-weighted assets		733,988	14.74		700,790	14.64		691,044	15.12

Regulatory Capital – Bank
Tier I leverage (E)	$	670,717	10.79%	$	612,762	9.99%	$	594,610	10.15%
Tier I capital to risk-weighted assets (F)		670,717	13.48		612,762	12.80		594,610	13.01
Common equity tier I capital ratio to risk-weighted assets (G)		670,693	13.48		612,738	12.80		594,581	13.01
Tier I & II capital to risk-weighted assets (H)		731,325	14.69		672,614	14.05		651,841	14.26

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter end.

(B) 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 quarter end is calculated by dividing tangible equity by tangible assets at quarter end. See Non-GAAP financial measures reconciliation included in these tables.

(D) Tangible book value per share excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by quarter end common shares outstanding. See Non-GAAP financial measures reconciliation tables.

(E) Regulatory well capitalized standard = 5.00% ($311 million)

(F) Regulatory well capitalized standard = 8.00% ($398 million)

(G) Regulatory well capitalized standard = 6.50% ($324 million)

(H) Regulatory well capitalized standard = 10.00% ($498 million)

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED

(Dollars in Thousands)

(Unaudited)


	For the Quarters Ended
	Sept 30,		June 30,		March 31,		Dec 31,		Sept 30,
	2022		2022		2022		2021		2021
Residential loans retained	$	17,885	$	35,172	$	41,547	$	22,953	$	36,845
Residential loans sold		4,898		9,886		15,669		20,694		24,041
Total residential loans		22,783		45,058		57,216		43,647		60,886
Commercial real estate		7,320		13,960		25,575		16,134		14,944
Multifamily		4,000		74,564		265,650		162,740		120,716
Commercial (C&I) loans/leases (A) (B)		251,249		332,801		143,029		341,886		143,121
SBA		5,682		10,534		26,093		27,630		11,570
Wealth lines of credit (A)		4,450		12,575		9,400		7,500		10,020
Total commercial loans		272,701		444,434		469,747		555,890		300,371
Installment loans		1,253		100		131		94		178
Home equity lines of credit (A)		5,614		3,897		1,341		5,359		2,535
Total loans closed	$	302,351	$	493,489	$	528,435	$	604,990	$	363,970


	For the Nine Months Ended
	Sept 30,		Sept 30,
	2022		2021
Residential loans retained	$	94,604	$	89,742
Residential loans sold		30,453		95,346
Total residential loans		125,057		185,088
Commercial real estate		46,855		65,550
Multifamily		344,214		461,545
Commercial (C&I) loans (A) (B)		727,079		413,547
SBA (C)		42,309		86,276
Wealth lines of credit (A)		26,425		15,695
Total commercial loans		1,186,882		1,042,613
Installment loans		1,484		266
Home equity lines of credit (A)		10,852		8,574
Total loans closed	$	1,324,275	$	1,236,541

(A) Includes loans and lines of credit that closed in the period but not necessarily funded.

(B) Includes equipment finance.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

(Tax-Equivalent Basis, Dollars in Thousands)

(Unaudited)


	For the Three Months Ended
	September 30, 2022								September 30, 2021
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	754,180		$	2,853		1.51	%	$	820,574		$	2,824		1.38	%
Tax-exempt (A) (B)		3,226			30		3.72			6,035			64		4.24

Loans (B) (C):
Mortgages		513,864			3,861		3.01			503,621			3,779		3.00
Commercial mortgages		2,510,616			23,121		3.68			2,133,259			16,114		3.02
Commercial		2,016,590			23,362		4.63			1,826,368			16,553		3.63
Commercial construction		12,073			143		4.74			24,596			198		3.22
Installment		38,338			399		4.16			32,219			245		3.04
Home equity		36,706			451		4.91			43,182			357		3.31
Other		263			7		10.65			252			5		7.94
Total loans		5,128,450			51,344		4.00			4,563,497			37,251		3.27
Federal funds sold		—			—		—			—			—		—
Interest-earning deposits		232,158			1,162		2.00			413,623			142		0.14
Total interest-earning assets		6,118,014			55,389		3.62	%		5,803,729			40,281		2.78	%
Noninterest-earning assets:
Cash and due from banks		8,296								8,592
Allowance for credit losses		(59,464	)							(64,100	)
Premises and equipment		23,580								23,311
Other assets		97,583								201,287
Total noninterest-earning assets		69,995								169,090
Total assets	$	6,188,009							$	5,972,819

LIABILITIES:
Interest-bearing deposits:
Checking	$	2,408,206		$	5,127		0.85	%	$	2,098,827		$	1,177		0.22	%
Money markets		1,237,975			1,557		0.50			1,257,760			683		0.22
Savings		168,281			5		0.01			152,759			20		0.05
Certificates of deposit – retail		391,340			791		0.81			461,917			836		0.72
Subtotal interest-bearing deposits		4,205,802			7,480		0.71			3,971,263			2,716		0.27
Interest-bearing demand – brokered		85,000			345		1.62			85,000			385		1.81
Certificates of deposit – brokered		25,968			210		3.23			33,796			266		3.15
Total interest-bearing deposits		4,316,770			8,035		0.74			4,090,059			3,367		0.33
Borrowings		3,810			29		3.04			64,332			57		0.35
Capital lease obligation		5,106			61		4.78			6,147			74		4.82
Subordinated debt		132,874			1,363		4.10			132,588			1,358		4.10
Total interest-bearing liabilities		4,458,560			9,488		0.85	%		4,293,126			4,856		0.45	%
Noninterest-bearing liabilities:
Demand deposits		1,116,843								997,450
Accrued expenses and other liabilities		83,446								137,387
Total noninterest-bearing liabilities		1,200,289								1,134,837
Shareholders’ equity		529,160								544,856
Total liabilities and shareholders’ equity	$	6,188,009							$	5,972,819
Net interest income				$	45,901							$	35,425
Net interest spread							2.77	%							2.33	%
Net interest margin (D)							2.98	%							2.42	%

(A) Average balances for available for sale securities are based on amortized cost.

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

(Tax-Equivalent Basis, Dollars in Thousands)

(Unaudited)


	For the Three Months Ended
	September 30, 2022								June 30, 2022
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	754,180		$	2,853		1.51	%	$	774,145		$	3,535		1.83	%
Tax-exempt (A) (B)		3,226			30		3.72			4,193			40		3.82

Loans (B) (C):
Mortgages		513,864			3,861		3.01			513,666			3,630		2.83
Commercial mortgages		2,510,616			23,121		3.68			2,552,128			21,185		3.32
Commercial		2,016,590			23,362		4.63			2,024,457			19,348		3.82
Commercial construction		12,073			143		4.74			16,186			162		4.00
Installment		38,338			399		4.16			37,235			297		3.19
Home equity		36,706			451		4.91			38,061			331		3.48
Other		263			7		10.65			258			6		9.30
Total loans		5,128,450			51,344		4.00			5,181,991			44,959		3.47
Federal funds sold		—			—		—			—			—		—
Interest-earning deposits		232,158			1,162		2.00			164,066			314		0.77
Total interest-earning assets		6,118,014			55,389		3.62	%		6,124,395			48,848		3.19	%
Noninterest-earning assets:
Cash and due from banks		8,296								9,715
Allowance for credit losses		(59,464	)							(59,629	)
Premises and equipment		23,580								22,952
Other assets		97,583								96,232
Total noninterest-earning assets		69,995								69,270
Total assets	$	6,188,009							$	6,193,665

LIABILITIES:
Interest-bearing deposits:
Checking	$	2,408,206		$	5,127		0.85	%	$	2,493,668		$	2,330		0.37	%
Money markets		1,237,975			1,557		0.50			1,234,564			579		0.19
Savings		168,281			5		0.01			163,062			5		0.01
Certificates of deposit – retail		391,340			791		0.81			411,202			651		0.63
Subtotal interest-bearing deposits		4,205,802			7,480		0.71			4,302,496			3,565		0.33
Interest-bearing demand – brokered		85,000			345		1.62			85,000			364		1.71
Certificates of deposit – brokered		25,968			210		3.23			33,470			261		3.12
Total interest-bearing deposits		4,316,770			8,035		0.74			4,420,966			4,190		0.38
Borrowings		3,810			29		3.04			3,873			10		1.03
Capital lease obligation		5,106			61		4.78			5,406			64		4.74
Subordinated debt		132,874			1,363		4.10			132,803			1,363		4.11
Total interest-bearing liabilities		4,458,560			9,488		0.85	%		4,563,048			5,627		0.49	%
Noninterest-bearing liabilities:
Demand deposits		1,116,843								1,029,538
Accrued expenses and other liabilities		83,446								79,882
Total noninterest-bearing liabilities		1,200,289								1,109,420
Shareholders’ equity		529,160								521,197
Total liabilities and shareholders’ equity	$	6,188,009							$	6,193,665
Net interest income				$	45,901							$	43,221
Net interest spread							2.77	%							2.70	%
Net interest margin (D)							2.98	%							2.83	%

(A) Average balances for available for sale securities are based on amortized cost.

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

(Tax-Equivalent Basis, Dollars in Thousands)

(Unaudited)


	For the Nine Months Ended
	September 30, 2022								September 30, 2021
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	818,411		$	9,995		1.63	%	$	822,262		$	8,473		1.37	%
Tax-exempt (A) (B)		4,035			117		3.87			6,961			243		4.65

Loans (B) (C):
Mortgages		511,999			11,148		2.90			501,276			11,559		3.07
Commercial mortgages		2,472,503			62,481		3.37			1,972,723			45,590		3.08
Commercial		2,016,533			60,911		4.03			1,900,231			49,992		3.51
Commercial construction		15,427			465		4.02			20,418			516		3.37
Installment		36,697			951		3.46			34,724			777		2.98
Home equity		38,324			1,106		3.85			45,672			1,133		3.31
Other		268			18		8.96			239			15		8.37
Total loans		5,091,751			137,080		3.59			4,475,283			109,582		3.26
Federal funds sold		—			—		—			64			—		0.13
Interest-earning deposits		174,833			1,505		1.15			465,287			367		0.11
Total interest-earning assets		6,089,030			148,697		3.26	%		5,769,857			118,665		2.74	%
Noninterest-earning assets:
Cash and due from banks		8,491								10,018
Allowance for credit losses		(60,026	)							(67,592	)
Premises and equipment		23,187								23,087
Other assets		119,908								203,344
Total noninterest-earning assets		91,560								168,857
Total assets	$	6,180,590							$	5,938,714

LIABILITIES:
Interest-bearing deposits:
Checking	$	2,411,023		$	8,695		0.48	%	$	1,996,663		$	3,099		0.21	%
Money markets		1,255,341			2,675		0.28			1,250,933			2,204		0.23
Savings		162,675			15		0.01			140,066			55		0.05
Certificates of deposit – retail		409,442			2,048		0.67			494,255			3,333		0.90
Subtotal interest-bearing deposits		4,238,481			13,433		0.42			3,881,917			8,691		0.30
Interest-bearing demand – brokered		85,000			1,082		1.70			100,110			1,334		1.78
Certificates of deposit – brokered		31,058			732		3.14			33,783			791		3.12
Total interest-bearing deposits		4,354,539			15,247		0.47			4,015,810			10,816		0.36
Borrowings		20,876			103		0.66			138,448			448		0.43
Capital lease obligation		5,389			193		4.78			6,376			229		4.79
Subordinated debt		132,803			4,090		4.11			165,053			5,650		4.56
Total interest-bearing liabilities		4,513,607			19,633		0.58	%		4,325,687			17,143		0.53	%
Noninterest-bearing liabilities:
Demand deposits		1,042,064								932,088
Accrued expenses and other liabilities		93,462								143,045
Total noninterest-bearing liabilities		1,135,526								1,075,133
Shareholders’ equity		531,457								533,894
Total liabilities and shareholders’ equity	$	6,180,590							$	5,934,714
Net interest income				$	129,064							$	101,522
Net interest spread							2.68	%							2.21	%
Net interest margin (D)							2.83	%							2.35	%

(A) Average balances for available for sale securities are based on amortized cost.

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding other real estate owned provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides a reasonable measure of core expenses relative to core revenue.

We believe these non-GAAP financial measures provide information that is important to investors and useful in understanding our financial position, results and ratios because our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

(Dollars in thousands, except share data)


	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
Tangible Book Value Per Share	2022			2022			2022			2021			2021
Shareholders’ equity	$	515,514		$	520,324		$	523,426		$	546,388		$	543,014
Less: Intangible assets, net		47,698			48,082			48,471			48,902			49,333
Tangible equity	$	467,816		$	472,242		$	474,955		$	497,486		$	493,681
Less: other comprehensive loss		(74,983	)		(58,727	)		(40,938	)		(12,374	)		(9,035	)
Tangible equity excluding other comprehensive loss	$	542,799		$	530,969		$	515,893		$	509,860		$	502,716

Period end shares outstanding		17,920,571			18,190,009			18,370,312			18,393,888			18,627,910
Tangible book value per share	$	26.10		$	25.96		$	25.85		$	27.05		$	26.50
Tangible book value per share excluding other comprehensive loss	$	30.29		$	29.19		$	28.08		$	27.72		$	26.99
Book value per share		28.77			28.60			28.49			29.70			29.15

Tangible Equity to Tangible Assets
Total assets	$	6,087,261		$	6,151,167		$	6,255,664		$	6,077,993		$	6,240,285
Less: Intangible assets, net		47,698			48,082			48,471			48,902			49,333
Tangible assets	$	6,039,563		$	6,103,085		$	6,207,193		$	6,029,091		$	6,190,952
Less: other comprehensive loss		(74,983	)		(58,727	)		(40,938	)		(12,374	)		(9,035	)
Tangible assets excluding other comprehensive loss	$	6,114,546		$	6,161,812		$	6,248,131		$	6,041,465		$	6,199,987

Tangible equity to tangible assets		7.75	%		7.74	%		7.65	%		8.25	%		7.97	%
Tangible equity to tangible assets excluding other comprehensive loss		8.88	%		8.62	%		8.26	%		8.44	%		8.11	%
Equity to assets		8.47	%		8.46	%		8.37	%		8.99	%		8.70	%


	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
Return on Average Tangible Equity	2022			2022			2022			2021			2021
Net income	$	20,126		$	20,100		$	13,441		$	14,855		$	14,171

Average shareholders’ equity	$	529,160		$	521,197		$	544,179		$	543,035		$	544,856
Less: Average intangible assets, net		47,922			48,291			48,717			49,151			48,757
Average tangible equity	$	481,238		$	472,906		$	495,462		$	493,884		$	496,099

Return on average tangible common equity		16.73	%		17.00	%		10.85	%		12.03	%		11.43	%


	For the Nine Months Ended
	Sept 30,			Sept 30,
Return on Average Tangible Equity	2022			2021
Net income	$	53,667		$	41,767

Average shareholders’ equity	$	531,457		$	533,894
Less: Average intangible assets, net		48,307			45,306
Average tangible equity		483,150			488,588

Return on average tangible common equity		14.81	%		11.40	%


	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
Efficiency Ratio	2022			2022			2022			2021			2021
Net interest income	$	45,525		$	42,893		$	39,622		$	37,212		$	35,211
Total other income		16,383			18,508			14,714			18,964			17,781
Add:
Fair value adjustment for CRA equity security		571			475			682			139			70
Less:
Loss/(gain) on loans held for sale
at lower of cost or fair value		—			—			—			265			—
Loss on securities sale, net		—			—			6,609			—			—
Total recurring revenue		62,479			61,876			61,627			56,580			53,062

Operating expenses		33,560			32,659			34,169			31,704			32,185
Less:
Swap valuation allowance		—			—			673			893			1,350
Severance expense		—			—			1,476			—			—
Total operating expense		33,560			32,659			32,020			30,811			30,835

Efficiency ratio		53.71	%		52.78	%		51.96	%		54.46	%		58.11	%


	For the Nine Months Ended
	Sept 30,			Sept 30,
Efficiency Ratio	2022			2021
Net interest income	$	128,040		$	100,849
Total other income		49,605			53,279
Add:
Fair value adjustment for CRA equity security		1,728			293
Less:
Loss on swap termination		—			842
Income from life insurance proceeds		—			(455	)
Loss/(gain) on loans held for sale
at lower of cost or fair value		—			(1,407	)
Loss on securities sale, net		6,609			—
Total recurring revenue		185,982			153,401

Operating expenses		100,388			94,463
Less:
Write-off of subordinated debt costs		—			648
Swap valuation allowance		673			1,350
Severance expense		1,476			1,532
Total operating expense		98,239			90,933

Efficiency ratio		52.82	%		59.28	%