• Peapack-Gladstone Financial Corporation Reports Third Quarter Results

    Source: Nasdaq GlobeNewswire / 24 Oct 2023 16:30:01   America/New_York

    BEDMINSTER, NJ, Oct. 24, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2023 financial results.

    This earnings release should be read in conjunction with the Company’s Q3 2023 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 $55.9 million, net income of $8.8 million and diluted earnings per share (“EPS”) of $0.49 for the quarter ended September 30, 2023, compared to revenue of $61.9 million, net income of $20.1 million and diluted EPS of $1.09 for the quarter ended September 30, 2022.

    The net interest margin declined to 2.28% for the quarter ended September 30, 2023, compared to 2.49% for the quarter ended June 30, 2023 and 2.98% for the quarter ended September 30, 2022.

    The Company’s return on average assets was 0.54%, return on average equity was 6.20%, and return on average tangible equity was 6.75% for the quarter ended September 30, 2023. Loans grew by $44 million to $5.5 billion funded by deposit growth of $61 million to $5.3 billion during the third quarter.

    The Company’s liquidity position remains strong as balance sheet liquidity was $756 million as of September 30, 2023, which was 11.59% of total assets. The Company also had $2.8 billion of external borrowing capacity available, when combined with balance sheet liquidity provides us with 294% coverage of our uninsured deposits. Approximately 77% of our deposits are presently covered by FDIC insurance or are fully collateralized.

    Douglas L. Kennedy, President and CEO, said, “Our third quarter results were impacted by the continuing compression of our net interest margin primarily driven by the rapid rise in our cost of funds. We were however encouraged to see signs of stabilization in the margin during the quarter as we look at our results on a monthly basis. In addition, our business continues to generated a sizable and consistent stream of noninterest income led by the revenue generated by our Wealth Management business. Noninterest income represented 35% of total revenue during the third quarter."

    Mr. Kennedy also noted, “The third quarter results also reflect an elevated provision for credit losses driven by two credit relationships that were transferred to non-performing status during the quarter. Both of these relationships are in the freight industry which is currently facing a massive downturn due to supply and demand imbalances. As we move forward through this challenging economic environment consisting of persistent inflation and rapidly rising interest rates, we continue to analyze our loan portfolio for areas of concern. We believe the diversity of our portfolio and strength of our underwriting standards will protect us in the long term. Unfortunately, we have been forced to deal with a handful of credit issues that have arisen as a result of current economic conditions."

    As previously announced, the Company has been approved by its regulators to open a location in mid-town Manhattan in 2024 and has hired a team of experienced professionals to gain entry into this lucrative market. The team, who predominantly started during the third quarter, is performing above expectations and is building robust pipelines.

    Mr. Kennedy said, "From a strategic standpoint, the Company is adopting new technology and processes to improve the client experience, which includes empowering all employees to provide innovative solutions and a white glove experience in every interaction."

    The following are select highlights for the period ended September 30, 2023:

    Wealth Management:

    • Gross new business inflows for Q3 2023 totaled $160 million ($96 million managed). For the first nine months of 2023, gross business inflows totaled $688 million ($547 million managed).
    • AUM/AUA in our Wealth Management Division totaled $10.4 billion at September 30, 2023 compared to $9.3 billion at September 30, 2022, which is an increase of 12% year over year.
    • Wealth Management fee income of $14.0 million for Q3 2023 comprised 25% of total revenue for the quarter.

    Commercial Banking and Balance Sheet Management:

    • Total loans were $5.5 billion at September 30, 2023 reflecting growth of $193 million when compared to $5.3 billion at December 31, 2022.
    • Commercial & industrial lending (“C&I”) loan/lease balances comprised 42% of the total loan portfolio at September 30, 2023.
    • Fee income on unused commercial lines of credit totaled $794,000 for Q3 2023.
    • Fee income recorded by the Equipment Finance division related to equipment transfers to lessees totaled $2.3 million for Q3 2023.
    • The net interest margin ("NIM") was 2.28% in Q3 2023, a decline of 21 basis points compared to Q2 2023 and a decline of 70 basis points when compared to Q3 2022.
    • Total deposits increased $54 million to $5.3 billion from December 31, 2022.
    • Noninterest-bearing demand deposits have declined by $299 million since December 31, 2022.
    • Noninterest-bearing demand deposits represented 18% of total deposits as of September 30, 2023.
    • Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 89% of total deposits at September 30, 2023.

    Capital Management:

    • During the quarter, the Company repurchased 100,000 shares of Company stock for a cost of $2.8 million. On a year to date basis 367,014 shares have been repurchased during 2023. The Company repurchased 930,977 shares of stock for a cost of $32.7 million during the year ended December 31, 2022.
    • At September 30, 2023, the Regulatory Tier 1 Leverage Ratio stood at 10.75% for Peapack-Gladstone Bank (the "Bank") and 9.05% for the Company. The Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.22% for the Bank and 11.13% for the Company at September 30, 2023. These ratios are significantly above well capitalized standards, as capital has benefited from net income generation.

    Non-Core Items:

    The September 2023 quarter included a:

    • $404,000 negative fair value adjustment on an equity security held for CRA investment, which decreased total revenue by $404,000, reduced net income by $293,000 and EPS by $0.01 for the September 2023 quarter. Management believes this to be a non-core item.

    SUMMARY INCOME STATEMENT DETAILS:

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

    September 2023 Year Compared to Prior Year

      Nine Months Ended  Nine Months Ended        
      September 30,  September 30,   Increase/ 
    (Dollars in millions, except per share data) 2023  2022   (Decrease) 
    Net interest income $119.41  $128.04   $(8.63)  (7)%
    Wealth management fee income  41.99   41.67    0.32   1 
    Capital markets activity  2.45   8.30    (5.85)  (70)
    Other income (A)  11.55   (0.36)   11.91  N/A 
    Total other income  55.99   49.61    6.38   13 
                  
    Total Revenue  175.40   177.65    (2.25)  (1)%
                  
    Operating expenses (B)  110.68   100.39    10.29   10 
    Pretax income before provision for credit losses  64.72   77.26    (12.54)  (16)
    Provision for credit losses  9.06   4.42    4.64   105 
    Pretax income  55.66   72.84    (17.18)  (24)
    Income tax expense  15.40   19.17    (3.77)  (20)
    Net income $40.26  $53.67   $(13.41)  (25)%
    Diluted EPS $2.23  $2.88   $(0.65)  (23)%
                  
    Return on average assets  0.84%  1.16%   (0.32)   
    Return on average equity  9.66%  13.46%   (3.80)   

    (A) Other income for the nine months ended September 30, 2023 included fee income from equipment finance activity of $2.7 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the nine months ended September 30, 2022 included a $6.6 million loss on sale of securities and a fair value adjustment on a CRA equity security of negative $1.7 million.
    (B) The nine months ended September 2023 included one-time charges of $2.0 million related to the recent retirement of certain employees and $175,000 of expense associated with three retail branch closures. The nine months ended September 30, 2022 included $1.5 million of severance expense related to certain staff reorganizations.

    September 2023 Quarter Compared to Prior Year Quarter

      Three Months Ended   Three Months Ended       
      September 30,   September 30,  Increase/ 
    (Dollars in millions, except per share data) 2023   2022  (Decrease) 
    Net interest income $36.52   $45.53  $(9.01)  (20)%
    Wealth management fee income  13.98    12.94   1.04   8 
    Capital markets activity  0.61    0.78   (0.17)  (22)
    Other income (A)  4.76    2.66   2.10   79 
    Total other income  19.35    16.38   2.97   18 
                  
    Total Revenue  55.87    61.91   (6.04)  (10)%
                  
    Operating expenses  37.41    33.56   3.85   11 
    Pretax income before provision for credit losses  18.46    28.35   (9.89)  (35)
    Provision for credit losses  5.86    0.60   5.26   877 
    Pretax income  12.60    27.75   (15.15)  (55)
    Income tax expense  3.84    7.62   (3.78)  (50)
    Net income $8.76   $20.13  $(11.37)  (56)%
    Diluted EPS $0.49   $1.09  $(0.60)  (55)%
                  
    Return on average assets annualized  0.54%   1.30%  (0.76)   
    Return on average equity annualized  6.20%   15.21%  (9.01)   

    (A) Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the September 2022 quarter included a fair value adjustment on a CRA equity security of negative $571,000.

    September 2023 Quarter Compared to Linked Quarter

      Three Months Ended  Three Months Ended        
      September 30,  June 30,   Increase/ 
    (Dollars in millions, except per share data) 2023  2023   (Decrease) 
    Net interest income $36.52  $38.92   $(2.40)  (6)%
    Wealth management fee income  13.98   14.25    (0.27)  (2)
    Capital markets activity  0.61   0.87    (0.26)  (30)
    Other income (A)  4.76   3.46    1.30   38 
    Total other income  19.35   18.58    0.77   4 
                  
    Total Revenue  55.87   57.50    (1.63)  (3)%
                  
    Operating expenses (B)  37.41   37.69    (0.28)  (1)
    Pretax income before provision for credit losses  18.46   19.81    (1.35)  (7)
    Provision for credit losses  5.86   1.70    4.16   245 
    Pretax income  12.60   18.11    (5.51)  (30)
    Income tax expense (C)  3.84   4.96    (1.12)  (23)
    Net income $8.76  $13.15   $(4.39)  (33)%
    Diluted EPS $0.49  $0.73   $(0.24)  (33)%
                  
    Return on average assets annualized  0.54%  0.82%   (0.28)   
    Return on average equity annualized  6.20%  9.43%   (3.23)   

    (A) Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the June 2023 quarter included a fair value adjustment on a CRA equity security of negative $209,000.
    (B) The June 2023 quarter included one-time charges of $1.7 million associated with the recent retirement of certain employees.
    (C) The three months ended June 30, 2023 included a $318,000 tax benefit for the reversal of the New Jersey surtax, which is set to expire on December 31, 2023.

    SUPPLEMENTAL QUARTERLY DETAILS:

    Wealth Management

    AUM/AUA in the Bank’s Wealth Management Division were $10.4 billion at September 30, 2023. For the September 2023 quarter, the Wealth Management Team generated $14.0 million in fee income, compared to $14.3 million for the June 30, 2023 quarter and $12.9 million for the September 2022 quarter. The equity market declined slightly during Q3 2023, contributing to the decrease in AUM/AUA on a linked quarter basis.

    John Babcock, President of the Bank's Wealth Management Division, noted, “In Q3 2023, total new accounts and client additions amounted to $160 million ($96 million managed). As we look ahead to the fourth quarter of 2023 and beyond, our new business pipeline is healthy and we remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes us in our market and continues to drive our growth and success.”

    Loans / Commercial Banking

    Total loans grew $193 million or 4% (5% annualized) to $5.5 billion at September 30, 2023 when compared to $5.3 billion at December 31, 2022.

    Total C&I loans and leases at September 30, 2023 were $2.3 billion or 42% of the total loan portfolio.

    Mr. Kennedy noted, “Given economic uncertainty and rising interest rates, we believe loan demand will be muted somewhat compared to recent prior years. Given the current environment, we believe we will achieve modest loan growth in 2023.”

    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, Corporate Advisory and SBA businesses. We believe these business lines fit perfectly with our private banking business model.”

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

    The Company’s NII of $36.5 million and NIM of 2.28% for Q3 2023 decreased $2.4 million and 21 basis points from NII of $38.9 million and NIM of 2.49% for the linked quarter (Q2 2023) and decreased $9.0 million and 70 basis points from NII of $45.5 million and NIM of 2.98% for the prior year (Q3 2022). When comparing Q3 2023 to the linked and prior year quarter, the Company has seen a sharp increase in interest expense mostly driven by higher deposit rates during 2023. Cycle to date betas are approximately 44%. The intense competition for deposit balances from other banks and alternative investment opportunities due to the significant rise in interest rates at such a rapid pace were the primary drivers for increased deposit costs.

    Funding / Liquidity / Interest Rate Risk Management

    Total deposits increased $54.2 million to $5.3 billion at September 30, 2023 from December 31, 2022. Deposit inflows were benefitted by net growth in brokered/listing service certificates of deposit of $77.2 million partially offset by a decline in brokered interest-bearing deposits of $50.0 million. The Company saw limited net deposit outflows in 2023 mostly including larger deposit relationships using their funds for normal business purposes such as deployment of excess liquidity into higher yielding treasuries or the equity market, tax payments, or asset acquisitions or investment into their business. The Company has also seen clients transition money from noninterest-bearing deposit accounts to higher yielding deposit accounts as a result of increases in the Fed Funds rate.

    At September 30, 2023, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $756 million, or 12% of assets.

    The Company maintains additional liquidity resources of approximately $2.8 billion through secured available funding with the Federal Home Loan Bank and 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. In addition, the Company also has access to the Bank Term Funding Program offered by the Federal Reserve Bank if needed.

    The Company's total on and off-balance sheet liquidity totaled $3.6 billion, which is 294% of the total uninsured/uncollateralized deposits on the Company's balance sheet.

    Income from Capital Markets Activities

    Noninterest income from Capital Markets activities (detailed below) totaled $613,000 for the September 2023 quarter compared to $868,000 for the June 2023 quarter and $784,000 for the September 2022 quarter. The gain on sale of SBA loans was lower in Q3 2023 due to less activity in the higher interest rate environment and tighter margins.

      Three Months Ended  Three Months Ended  Three Months Ended 
      September 30,  June 30,  September 30, 
    (Dollars in thousands, except per share data) 2023  2023  2022 
    Gain on loans held for sale at fair value (Mortgage banking) $37  $15  $60 
    Fee income related to loan level, back-to-back swaps  —   —   — 
    Gain on sale of SBA loans  491   838   622 
    Corporate advisory fee income  85   15   102 
    Total capital markets activity $613  $868  $784 

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

    Other noninterest income was $4.8 million for Q3 2023 compared to $3.5 million for Q2 2023 and $2.7 million for Q3 2022. Q3 2023 included $2.3 million of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases while Q2 2023 included $221,000 and Q3 2022 included $547,000 respectively. Additionally, Q3 2023 included $794,000 of unused line fees compared to $809,000 for Q2 2023 and $818,000 for Q3 2022.

    Operating Expenses

    The Company’s total operating expenses were $37.4 million for the third quarter of 2023, compared to $37.7 million for the June 2023 quarter and $33.6 million for the September 2022 quarter. The September 2023 quarter included expenses associated with the previously announced New York City expansion. The June 2023 quarter included one-time charge of $1.7 million associated with the recent retirement of certain employees.

    Mr. Kennedy noted, “The Company is committed to be in a position of strength when industry headwinds recede as evidenced by the recent announcement of its decision to expand into New York City and the opening of a retail bank location in mid-town Manhattan. We will manage expenses closely and prudently, but will continue to invest to retain talent. We also plan to grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs if opportunities arise, and invest in digital and other software tools to further enhance the client experience.”

    Income Taxes

    The effective tax rate for the three months ended September 30, 2023 was 30.5%, as compared to 27.4% for the June 2023 quarter and 27.5% for the quarter ended September 30, 2022. The higher tax rate for the September 30 quarter was primarily due to the impact of certain non-deductible expenses related to compensation and benefits.

    Asset Quality / Provision for Credit Losses

    Nonperforming assets (which does not include modified loans that are performing in accordance with their terms) were $70.8 million, or 1.09% of total assets at September 30, 2023, as compared to $34.5 million, or 0.53% of total assets at June 30, 2023. The increase during the third quarter was primarily due to two freight related clients totaling $33.4 million that were transferred to nonaccrual status during the quarter. Management is working diligently to resolve both matters as quickly and efficiently as possible. Loans past due 30 to 89 days and still accruing were $9.8 million, or 0.18% of total loans at September 30, 2023 compared to $14.5 million, or 0.27% of total loans at June 30, 2023.

    Criticized and classified loans totaled $148.2 million at September 30, 2023, reflecting an increase from June 30, 2023 and September 30, 2022 levels. The Company currently has no loans or leases on deferral and accruing.

    For the quarter ended September 30, 2023, the Company’s provision for credit losses was $5.9 million compared to $1.7 million for the June 2023 quarter and $665,000 for the September 2022 quarter. The increased provision for credit losses in the September 2023 quarter was primarily driven by specific provisions related to the two freight credits that were transferred to nonaccrual status during the quarter as described above.

    At September 30, 2023, the allowance for credit losses was $68.6 million (1.25% of total loans), compared to $62.7 million (1.15% of loans) at June 30, 2023, and $59.7 million (1.15% of loans) at September 30, 2022.

    Capital

    The Company’s capital position declined by $6.1 million during the September 2023 quarter as the Company repurchased 100,000 shares of common stock through the Company’s stock repurchase program at a cost of $2.8 million and paid a quarterly cash dividend of $893,000. Additionally, during the third quarter of 2023, the Company recorded a net loss in accumulated other comprehensive income of $13.7 million, net of tax. This amount was driven by a $15.0 million decline in the value of the available for sale securities portfolio partially offset by a $1.3 million gain on cash flow hedges. The total accumulated other comprehensive loss grew to $81.7 million as of September 30, 2023, ($91.0 million loss related to the available for sale securities portfolio partially offset by a $9.3 million gain on the cash flow hedges). These were partially offset by net income of $8.8 million.

    Tangible book value per share declined during Q3 2023 to $28.77 at September 30, 2023 from $28.98 at June 30, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release. The Company’s and Bank’s regulatory capital ratios as of September 30, 2023 remain strong, and generally reflect increases from September 30, 2022 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

    The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of June 30, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

    On September 27, 2023, the Company declared a cash dividend of $0.05 per share payable on November 27, 2023 to shareholders of record on November 9, 2023.

    ABOUT THE COMPANY

    Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.5 billion and assets under management/administration of $10.4 billion as of September 30, 2023. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its 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 2023 and beyond;
    • our ability to successfully integrate wealth management firm acquisitions;
    • 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, including potential recessionary conditions;
    • 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 credit losses or in the level of delinquent, nonperforming, classified and criticized loans;
    • inflation and changes in interest rates, which may adversely impact our 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;
    • a potential government shutdown;
    • 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, including our expansion into New York City;
    • a reduction in our lower-cost funding sources;
    • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
    • 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 governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
    • changes in accounting policies and practices; and/or
    • 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, 2022. 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.

    Contact:

    Frank A. Cavallaro, SEVP and CFO

    Peapack-Gladstone Financial Corporation

    T: 908-306-8933

    (Tables to follow)

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED CONSOLIDATED FINANCIAL DATA
    (Dollars in Thousands, except per share data)
    (Unaudited)

      For the Three Months Ended 
      Sept 30,  June 30,  March 31,  Dec 31,  Sept 30, 
      2023  2023  2023  2022  2022 
    Income Statement Data:               
    Interest income $78,489  $74,852  $70,491  $64,202  $55,013 
    Interest expense  41,974   35,931   26,513   16,162   9,488 
    Net interest income  36,515   38,921   43,978   48,040   45,525 
    Wealth management fee income  13,975   14,252   13,762   12,983   12,943 
    Service charges and fees  1,319   1,320   1,258   1,150   1,060 
    Bank owned life insurance  310   305   297   321   299 
    Gain on loans held for sale at fair value
    (Mortgage banking)    		  37   15   21   25   60 
    Fee income related to loan level, back-to-back
    swaps    		  —   —   —   293   — 
    Gain on sale of SBA loans  491   838   865   624   622 
    Corporate advisory fee income  85   15   80   8   102 
    Other income (A)  3,541   2,039   1,567   1,380   1,868 
    Fair value adjustment for CRA equity security  (404)  (209)  209   28   (571)
    Total other income  19,354   18,575   18,059   16,812   16,383 
                    
    Total revenue  55,869   57,496   62,037   64,852   61,908 
                    
    Salaries and employee benefits (B)  25,264   26,354   24,586   22,489   22,656 
    Premises and equipment  5,214   4,729   4,374   4,898   4,534 
    FDIC insurance expense  741   729   711   455   510 
    Other expenses  6,194   5,880   5,903   5,570   5,860 
    Total operating expenses  37,413   37,692   35,574   33,412   33,560 
    Pretax income before provision for credit losses  18,456   19,804   26,463   31,440   28,348 
    Provision for credit losses  5,856   1,696   1,513   1,930   599 
    Income before income taxes  12,600   18,108   24,950   29,510   27,749 
    Income tax expense (C)  3,845   4,963   6,595   8,931   7,623 
    Net income $8,755  $13,145  $18,355  $20,579  $20,126 
                    
    Per Common Share Data:               
    Earnings per share (basic) $0.49  $0.73  $1.03  $1.15  $1.11 
    Earnings per share (diluted)  0.49   0.73   1.01   1.12   1.09 
    Weighted average number of common
    shares outstanding:    		               
    Basic  17,856,961   17,930,611   17,841,203   17,915,058   18,072,385 
    Diluted  18,010,127   18,078,848   18,263,310   18,382,193   18,420,661 
    Performance Ratios:               
    Return on average assets annualized (ROAA)  0.54%  0.82%  1.16%  1.33%  1.30%
    Return on average equity annualized (ROAE)  6.20%  9.43%  13.50%  15.73%  15.21%
    Return on average tangible common equity annualized (ROATCE) (D)  6.75%  10.30%  14.78%  17.30%  16.73%
    Net interest margin (tax-equivalent basis)  2.28%  2.49%  2.88%  3.12%  2.98%
    GAAP efficiency ratio (E)  66.97%  65.56%  57.34%  51.52%  54.21%
    Operating expenses / average assets annualized  2.31%  2.36%  2.26%  2.15%  2.17%

    (A) The September 2023 quarter included $2.3 million of fee income from equipment finance activity.
    (B) The June 2023 quarter included $1.7 million of expense associated with the recent retirement of certain employees.
    (C) The three months ended December 31, 2022 included $750,000 income tax expense (net federal benefit) related to a recent New York City nexus determination change which included $563,000 from prior quarters.
    (D) 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.
    (E) 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       
      September 30,  Change 
      2023  2022  $  % 
    Income Statement Data:            
    Interest income $223,832  $147,673  $76,159   52%
    Interest expense  104,418   19,633   84,785   432%
    Net interest income  119,414   128,040   (8,626)  -7%
    Wealth management fee income  41,989   41,668   321   1%
    Service charges and fees  3,897   3,075   822   27%
    Bank owned life insurance  912   922   (10)  -1%
    Gain on loans held for sale at fair value (Mortgage banking)  73   458   (385)  -84%
    Fee income related to loan level, back-to-back swaps  —   —   —  N/A 
    Gain on sale of SBA loans  2,194   6,141   (3,947)  -64%
    Corporate advisory fee income  180   1,696   (1,516)  -89%
    Other income (A)  7,147   3,982   3,165   79%
    Loss on securities sale, net (B)  —   (6,609)  6,609   -100%
    Fair value adjustment for CRA equity security  (404)  (1,728)  1,324   -77%
    Total other income  55,988   49,605   6,383   13%
                 
    Total revenue  175,402   177,645   (2,243)  -1%
                 
    Salaries and employee benefits (C)  76,204   66,987   9,217   14%
    Premises and equipment  14,317   13,821   496   4%
    FDIC insurance expense  2,181   1,484   697   47%
    Swap valuation allowance  —   673   (673)  -100%
    Other expenses  17,977   17,423   554   3%
    Total operating expenses  110,679   100,388   10,291   10%
    Pretax income before provision for credit losses  64,723   77,257   (12,534)  -16%
    Provision for credit losses  9,065   4,423   4,642   105%
    Income before income taxes  55,658   72,834   (17,176)  -24%
    Income tax expense  15,403   19,167   (3,764)  -20%
    Net income $40,255  $53,667  $(13,412)  -25%
                 
                 
    Per Common Share Data:            
    Earnings per share (basic) $2.25  $2.94  $(0.69)  -23%
    Earnings per share (diluted)  2.23   2.88   (0.65)  -23%
    Weighted average number of common shares outstanding:            
    Basic  17,876,316   18,244,691   (368,375)  -2%
    Diluted  18,091,524   18,652,042   (560,518)  -3%
    Performance Ratios:            
    Return on average assets (ROAA)  0.84%  1.16%  (0.32)%  -28%
    Return on average equity (ROAE)  9.66%  13.46%  (3.80)%  -28%
    Return on average tangible common equity (ROATCE) (D)  10.55%  14.81%  (4.26)%  -29%
    Net interest margin (tax-equivalent basis)  2.54%  2.83%  (0.29)%  -10%
    GAAP efficiency ratio (E)  63.10%  56.51%  6.59%  12%
    Operating expenses / average assets  2.31%  2.17%  0.14%  6%

    (A) The nine months ended September 2023 included $2.7 million of fee income from equipment finance activity.
    (B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.
    (C) The nine months ended September 30, 2023 included $2.0 million of expense associated with the recent retirement of certain employees. The nine months ended September 30, 2022 quarter included $1.5 million of severance expense related to corporate restructuring.
    (D) 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.
    (E) 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, 
      2023  2023  2023  2022  2022 
    ASSETS               
    Cash and due from banks $7,400  $4,859  $6,514  $5,937  $5,066 
    Federal funds sold  —   —   —   —   — 
    Interest-earning deposits  180,469   166,769   244,779   184,138   103,214 
    Total cash and cash equivalents  187,869   171,628   251,293   190,075   108,280 
    Securities available for sale  521,005   540,519   556,266   554,648   497,880 
    Securities held to maturity  108,940   110,438   111,609   102,291   103,551 
    CRA equity security, at fair value  12,581   12,985   13,194   12,985   12,957 
    FHLB and FRB stock, at cost (A)  34,158   35,402   30,338   30,672   14,986 
                    
    Residential mortgage  585,295   575,238   544,655   525,756   519,088 
    Multifamily mortgage  1,871,853   1,884,369   1,871,387   1,863,915   1,856,675 
    Commercial mortgage  622,469   624,710   613,911   624,625   638,903 
    Commercial and industrial loans  2,321,917   2,278,133   2,266,837   2,213,762   2,099,917 
    Consumer loans  57,227   52,098   49,002   38,014   37,412 
    Home equity lines of credit  34,411   34,397   33,294   34,496   36,375 
    Other loans  265   269   443   304   259 
    Total loans  5,493,437   5,449,214   5,379,529   5,300,872   5,188,629 
    Less: Allowance for credit losses  68,592   62,704   62,250   60,829   59,683 
    Net loans  5,424,845   5,386,510   5,317,279   5,240,043   5,128,946 
                    
    Premises and equipment  23,969   23,814   23,782   23,831   23,781 
    Other real estate owned  —   —   116   116   116 
    Accrued interest receivable  22,889   20,865   19,143   25,157   17,816 
    Bank owned life insurance  47,509   47,382   47,261   47,147   47,072 
    Goodwill and other intangible assets  46,286   46,624   46,979   47,333   47,698 
    Finance lease right-of-use assets  2,274   2,461   2,648   2,835   3,021 
    Operating lease right-of-use assets  12,800   13,500   12,262   12,873   13,404 
    Other assets  76,456   67,572   47,848   63,587   67,753 
    TOTAL ASSETS $6,521,581  $6,479,700  $6,480,018  $6,353,593  $6,087,261 
                    
    LIABILITIES               
    Deposits:               
    Noninterest-bearing demand deposits $947,405  $1,024,105  $1,096,549  $1,246,066  $1,317,954 
    Interest-bearing demand deposits  2,871,359   2,816,913   2,797,493   2,143,611   2,149,629 
    Savings  117,905   120,082   132,523   157,338   166,821 
    Money market accounts  761,833   763,026   873,329   1,228,234   1,178,112 
    Certificates of deposit – Retail  422,291   384,106   357,131   318,573   345,047 
    Certificates of deposit – Listing Service  9,103   10,822   15,922   25,358   30,647 
    Subtotal “customer” deposits  5,129,896   5,119,054   5,272,947   5,119,180   5,188,210 
    IB Demand – Brokered  10,000   10,000   10,000   60,000   85,000 
    Certificates of deposit – Brokered  119,463   69,443   25,895   25,984   25,974 
    Total deposits  5,259,359   5,198,497   5,308,842   5,205,164   5,299,184 
    Short-term borrowings  470,576   485,360   378,800   379,530   32,369 
    Finance lease liability  3,752   4,071   4,385   4,696   5,003 
    Operating lease liability  13,595   14,308   13,082   13,704   14,101 
    Subordinated debt, net  133,203   133,131   133,059   132,987   132,916 
    Due to brokers  —   —   8,308   —   — 
    Other liabilities  82,140   79,264   78,584   84,532   88,174 
    TOTAL LIABILITIES  5,962,625   5,914,631   5,925,060   5,820,613   5,571,747 
    Shareholders’ equity  558,956   565,069   554,958   532,980   515,514 
    TOTAL LIABILITIES AND               
    SHAREHOLDERS’ EQUITY $6,521,581  $6,479,700  $6,480,018  $6,353,593  $6,087,261 
    Assets under management and / or administration at
    Peapack-Gladstone Bank’s Private Wealth Management
    Division (market value, not included above-dollars in billions)    		 $10.4  $10.7  $10.4  $9.9  $9.3 

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

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED BALANCE SHEET DATA
    (Dollars in Thousands)
    (Unaudited)

      As of 
      Sept 30,  June 30,  March 31,  Dec 31,  Sept 30, 
      2023  2023  2023  2022  2022 
    Asset Quality:               
    Loans past due over 90 days and still accruing $—  $—  $—  $—  $— 
    Nonaccrual loans (A)  70,809   34,505   28,659   18,974   15,724 
    Other real estate owned  —   —   116   116   116 
    Total nonperforming assets $70,809  $34,505  $28,775  $19,090  $15,840 
                    
    Nonperforming loans to total loans  1.29%  0.63%  0.53%  0.36%  0.30%
    Nonperforming assets to total assets  1.09%  0.53%  0.44%  0.30%  0.26%
                    
    Performing modifications (B)(C) $248  $248  $248  $—  $— 
                    
    Performing TDRs (D)(E) $—  $—  $—  $965  $2,761 
                    
    Loans past due 30 through 89 days and still accruing $9,780  $14,524  $2,762  $7,592  $7,248 
                    
    Loans subject to special mention $53,328  $53,606  $46,566  $64,842  $82,107 
                    
    Classified loans $94,866  $58,655  $58,010  $42,985  $27,507 
                    
    Individually evaluated loans $70,184  $33,867  $27,736  $16,732  $13,047 
                    
    Allowance for credit losses ("ACL"):               
    Beginning of quarter $62,704  $62,250  $60,829  $59,683  $59,022 
    Provision for credit losses (F)  5,944   1,666   1,464   2,103   665 
    (Charge-offs)/recoveries, net (G)  (56)  (1,212)  (43)  (957)  (4)
    End of quarter $68,592  $62,704  $62,250  $60,829  $59,683 
                    
    ACL to nonperforming loans  96.87%  181.72%  217.21%  320.59%  379.57%
    ACL to total loans  1.25%  1.15%  1.16%  1.15%  1.15%
    Collectively evaluated ACL to total loans (H)  1.10%  1.11%  1.11%  1.12%  1.10%

    (A) Excludes $1.6 million in held for sale at September 30, 2023. Includes two freight credits totaling $33.4 million at September 30, 2023.
    (B) Amounts reflect modifications that are paying according to modified terms.
    (C) Excludes modifications included in nonaccrual loans of $3.1 million at September 30, 2023 and $777,000 at June 30, 2023.
    (D) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.
    (E) Excludes TDRs included in nonaccrual loans in the following amounts: $13.4 million at December 31, 2022 and $12.9 million at September 30, 2022. On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.
    (F) Provision to roll forward the ACL excludes a credit of $88,000 at September 30, 2023, a provision of $30,000 at June 30, 2023, a provision of $49,000 at March 31, 2023, a credit of $173,000 at December 31, 2022 and a credit of $66,000 at September 30, 2022 related to off-balance sheet commitments.
    (G) Net charge-offs for the quarters ended June 30, 2023 and December 31, 2022 included a charge-off of $1.2 million of a previously established reserve to loans individually evaluated on one commercial real estate loan.
    (H) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED BALANCE SHEET DATA
    (Dollars in Thousands)
    (Unaudited)

      As of 
      September 30,  December 31,  September 30, 
      2023  2022  2022 
    Capital Adequacy               
    Equity to total assets (A)    8.57%    8.39%    8.47%
    Tangible equity to tangible assets (B)    7.92%    7.70%    7.75%
    Book value per share (C)   $31.37    $29.92    $28.77 
    Tangible book value per share (D)   $28.77    $27.26    $26.10 
                    
    Tangible equity to tangible assets excluding other comprehensive loss*    9.06%    8.77%    8.88%
    Tangible book value per share excluding other comprehensive loss*   $33.36    $31.43    $30.29 

    *Excludes other comprehensive loss of $81.7 million for the quarter ended September 30, 2023, $74.2 million for the quarter ended December 31, 2022, and $75.0 million for the quarter ended September 30, 2022. See Non-GAAP financial measures reconciliation included in these tables.

    (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.
    (C) Book value per common share is calculated by dividing shareholders’ equity by quarter end common shares outstanding.
    (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.

      As of
      September 30, December 31, September 30,
      2023  2022  2022 
    Regulatory Capital – Holding Company               
    Tier I leverage $592,061  9.05% $557,627  8.90% $540,464  8.70%
    Tier I capital to risk-weighted assets  592,061  11.13   557,627  11.02   540,464  10.86 
    Common equity tier I capital ratio
    to risk-weighted assets    		  592,043  11.13   557,609  11.02   540,440  10.86 
    Tier I & II capital to risk-weighted assets  784,777  14.76   745,197  14.73   733,988  14.74 
                    
    Regulatory Capital – Bank               
    Tier I leverage (E) $702,517  10.75% $680,137  10.85% $670,717  10.79%
    Tier I capital to risk-weighted assets (F)  702,517  13.22   680,137  13.45   670,717  13.48 
    Common equity tier I capital ratio
    to risk-weighted assets (G)    		  702,499  13.22   680,119  13.45   670,693  13.48 
    Tier I & II capital to risk-weighted assets (H)  768,979  14.47   741,719  14.67   731,325  14.69 

    (E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($261 million)
    (F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($452 million)
    (G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($372 million)
    (H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($558 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, 
      2023  2023  2023  2022  2022 
    Residential loans retained $21,310  $39,358  $30,303  $28,051  $17,885 
    Residential loans sold  2,503   1,072   1,477   1,840   4,898 
    Total residential loans  23,813   40,430   31,780   29,891   22,783 
    Commercial real estate  3,900   43,235   18,990   6,747   7,320 
    Multifamily  3,000   26,662   30,150   37,500   4,000 
    Commercial (C&I) loans/leases (A) (B)  176,845   158,972   207,814   238,568   251,249 
    SBA  300   13,713   9,950   17,431   5,682 
    Wealth lines of credit (A)  6,875   3,950   23,225   7,700   4,450 
    Total commercial loans  190,920   246,532   290,129   307,946   272,701 
    Installment loans  6,999   4,587   12,086   1,845   1,253 
    Home equity lines of credit (A)  6,275   6,107   2,921   3,815   5,614 
    Total loans closed $228,007  $297,656  $336,916  $343,497  $302,351 


      For the Nine Months Ended 
      Sept 30,  Sept 30, 
      2023  2022 
    Residential loans retained $90,971  $94,604 
    Residential loans sold  5,052   30,453 
    Total residential loans  96,023   125,057 
    Commercial real estate  66,125   46,855 
    Multifamily  59,812   344,214 
    Commercial (C&I) loans (A) (B)  543,631   727,079 
    SBA  23,963   42,309 
    Wealth lines of credit (A)  34,050   26,425 
    Total commercial loans  727,581   1,186,882 
    Installment loans  23,672   1,484 
    Home equity lines of credit (A)  15,303   10,852 
    Total loans closed $862,579  $1,324,275 

    (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, 2023  September 30, 2022 
      Average  Income/     Average  Income/    
      Balance  Expense  Yield  Balance  Expense  Yield 
    ASSETS:                  
    Interest-earning assets:                  
    Investments:                  
    Taxable (A) $806,861  $5,170   2.56% $754,180  $2,853   1.51%
    Tax-exempt (A) (B)  1,198   11   3.67   3,226   30   3.72 
                       
    Loans (B) (C):                  
    Mortgages  580,951   5,208   3.59   513,864   3,861   3.01 
    Commercial mortgages  2,502,351   27,746   4.44   2,510,616   23,121   3.68 
    Commercial  2,298,723   37,357   6.50   2,016,590   23,362   4.63 
    Commercial construction  12,346   282   9.14   12,073   143   4.74 
    Installment  56,248   967   6.88   38,338   399   4.16 
    Home equity  34,250   680   7.94   36,706   451   4.91 
    Other  234   7   11.97   263   7   10.65 
    Total loans  5,485,103   72,247   5.27   5,128,450   51,344   4.00 
    Federal funds sold  —   —   —   —   —   — 
    Interest-earning deposits  136,315   1,463   4.29   232,158   1,162   2.00 
    Total interest-earning assets  6,429,477   78,891   4.91%  6,118,014   55,389   3.62%
    Noninterest-earning assets:                  
    Cash and due from banks  6,954         8,296       
    Allowance for credit losses  (63,625)        (59,464)      
    Premises and equipment  23,880         23,580       
    Other assets  85,582         97,583       
    Total noninterest-earning assets  52,791         69,995       
    Total assets $6,482,268        $6,188,009       
                       
    LIABILITIES:                  
    Interest-bearing deposits:                  
    Checking $2,813,080  $24,318   3.46% $2,408,206  $5,127   0.85%
    Money markets  771,781   4,458   2.31   1,237,975   1,557   0.50 
    Savings  118,718   75   0.25   168,281   5   0.01 
    Certificates of deposit – retail  415,665   3,459   3.33   391,340   791   0.81 
    Subtotal interest-bearing deposits  4,119,244   32,310   3.14   4,205,802   7,480   0.71 
    Interest-bearing demand – brokered  10,000   136   5.44   85,000   345   1.62 
    Certificates of deposit – brokered  102,777   1,183   4.60   25,968   210   3.23 
    Total interest-bearing deposits  4,232,021   33,629   3.18   4,316,770   8,035   0.74 
    Borrowings  470,616   6,569   5.58   3,810   29   3.04 
    Capital lease obligation  3,863   46   4.76   5,106   61   4.78 
    Subordinated debt  133,163   1,730   5.20   132,874   1,363   4.10 
    Total interest-bearing liabilities  4,839,663   41,974   3.47%  4,458,560   9,488   0.85%
    Noninterest-bearing liabilities:                  
    Demand deposits  990,854         1,116,843       
    Accrued expenses and other liabilities  86,598         83,446       
    Total noninterest-bearing liabilities  1,077,452         1,200,289       
    Shareholders’ equity  565,153         529,160       
    Total liabilities and shareholders’ equity $6,482,268        $6,188,009       
    Net interest income    $36,917        $45,901    
    Net interest spread        1.44%        2.77%
    Net interest margin (D)        2.28%        2.98%

    (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.
    (C) Loans are stated net of unearned income and include nonaccrual loans.
    (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, 2023  June 30, 2023 
      Average  Income/     Average  Income/    
      Balance  Expense  Yield  Balance  Expense  Yield 
    ASSETS:                  
    Interest-earning assets:                  
    Investments:                  
    Taxable (A) $806,861  $5,170   2.56% $806,447  $4,900   2.43%
    Tax-exempt (A) (B)  1,198   11   3.67   1,858   20   4.31 
                       
    Loans (B) (C):                  
    Mortgages  580,951   5,208   3.59   557,575   4,942   3.55 
    Commercial mortgages  2,502,351   27,746   4.44   2,504,268   26,839   4.29 
    Commercial  2,298,723   37,357   6.50   2,241,817   35,457   6.33 
    Commercial construction  12,346   282   9.14   6,977   165   9.46 
    Installment  56,248   967   6.88   51,269   841   6.56 
    Home equity  34,250   680   7.94   33,650   633   7.52 
    Other  234   7   11.97   271   7   10.33 
    Total loans  5,485,103   72,247   5.27   5,395,827   68,884   5.11 
    Federal funds sold  —   —   —   —   —   — 
    Interest-earning deposits  136,315   1,463   4.29   141,968   1,451   4.09 
    Total interest-earning assets  6,429,477   78,891   4.91%  6,346,100   75,255   4.74%
    Noninterest-earning assets:                  
    Cash and due from banks  6,954         7,800       
    Allowance for credit losses  (63,625)        (63,045)      
    Premises and equipment  23,880         23,745       
    Other assets  85,582         85,969       
    Total noninterest-earning assets  52,791         54,469       
    Total assets $6,482,268        $6,400,569       
                       
    LIABILITIES:                  
    Interest-bearing deposits:                  
    Checking $2,813,080  $24,318   3.46% $2,834,140  $22,219   3.14%
    Money markets  771,781   4,458   2.31   788,745   3,853   1.95 
    Savings  118,718   75   0.25   125,555   45   0.14 
    Certificates of deposit – retail  415,665   3,459   3.33   385,211   2,462   2.56 
    Subtotal interest-bearing deposits  4,119,244   32,310   3.14   4,133,651   28,579   2.77 
    Interest-bearing demand – brokered  10,000   136   5.44   10,000   125   5.00 
    Certificates of deposit – brokered  102,777   1,183   4.60   26,165   196   3.00 
    Total interest-bearing deposits  4,232,021   33,629   3.18   4,169,816   28,900   2.77 
    Borrowings  470,616   6,569   5.58   413,961   5,384   5.20 
    Capital lease obligation  3,863   46   4.76   4,187   50   4.78 
    Subordinated debt  133,163   1,730   5.20   133,090   1,597   4.80 
    Total interest-bearing liabilities  4,839,663   41,974   3.47%  4,721,054   35,931   3.04%
    Noninterest-bearing liabilities:                  
    Demand deposits  990,854         1,033,176       
    Accrued expenses and other liabilities  86,598         88,911       
    Total noninterest-bearing liabilities  1,077,452         1,122,087       
    Shareholders’ equity  565,153         557,428       
    Total liabilities and shareholders’ equity $6,482,268        $6,400,569       
    Net interest income    $36,917        $39,324    
    Net interest spread        1.44%        1.70%
    Net interest margin (D)        2.28%        2.49%

    (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.
    (C) Loans are stated net of unearned income and include nonaccrual loans.
    (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, 2023  September 30, 2022 
      Average  Income/     Average  Income/    
      Balance  Expense  Yield  Balance  Expense  Yield 
    ASSETS:                  
    Interest-earning assets:                  
    Investments:                  
    Taxable (A) $801,535  $14,541   2.42% $818,411  $9,995   1.63%
    Tax-exempt (A) (B)  1,637   49   3.99   4,035   117   3.87 
                       
    Loans (B) (C):                  
    Mortgages  556,220   14,433   3.46   511,999   11,148   2.90 
    Commercial mortgages  2,495,175   80,503   4.30   2,472,503   62,481   3.37 
    Commercial  2,247,803   106,182   6.30   2,016,533   60,911   4.03 
    Commercial construction  7,903   536   9.04   15,427   465   4.02 
    Installment  49,214   2,416   6.55   36,697   951   3.46 
    Home equity  33,914   1,903   7.48   38,324   1,106   3.85 
    Other  260   22   11.28   268   18   8.96 
    Total loans  5,390,489   205,995   5.10   5,091,751   137,080   3.59 
    Federal funds sold  —   —   —   —   —   — 
    Interest-earning deposits  147,071   4,452   4.04   174,833   1,505   1.15 
    Total interest-earning assets  6,340,732   225,037   4.73%  6,089,030   148,697   3.26%
    Noninterest-earning assets:                  
    Cash and due from banks  8,388         8,491       
    Allowance for credit losses  (62,753)        (60,026)      
    Premises and equipment  23,850         23,187       
    Other assets  76,992         119,908       
    Total noninterest-earning assets  46,477         91,560       
    Total assets $6,387,209        $6,180,590       
                       
    LIABILITIES:                  
    Interest-bearing deposits:                  
    Checking $2,739,115  $63,018   3.07% $2,411,023  $8,695   0.48%
    Money markets  893,567   13,185   1.97   1,255,341   2,675   0.28 
    Savings  128,437   148   0.15   162,675   15   0.01 
    Certificates of deposit – retail  386,488   7,650   2.64   409,442   2,048   0.67 
    Subtotal interest-bearing deposits  4,147,607   84,001   2.70   4,238,481   13,433   0.42 
    Interest-bearing demand – brokered  15,311   469   4.08   85,000   1,082   1.70 
    Certificates of deposit – brokered  51,916   1,584   4.07   31,058   732   3.14 
    Total interest-bearing deposits  4,214,834   86,054   2.72   4,354,539   15,247   0.47 
    Borrowings  331,170   13,249   5.33   20,876   103   0.66 
    Capital lease obligation  4,179   149   4.75   5,389   193   4.78 
    Subordinated debt  133,090   4,966   4.98   132,803   4,090   4.11 
    Total interest-bearing liabilities  4,683,273   104,418   2.97%  4,513,607   19,633   0.58%
    Noninterest-bearing liabilities:                  
    Demand deposits  1,066,162         1,042,064       
    Accrued expenses and other liabilities  82,215         93,462       
    Total noninterest-bearing liabilities  1,148,377         1,135,526       
    Shareholders’ equity  555,559         531,457       
    Total liabilities and shareholders’ equity $6,387,209        $6,180,590       
    Net interest income    $120,619        $129,064    
    Net interest spread        1.76%        2.68%
    Net interest margin (D)        2.54%        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.
    (C) Loans are stated net of unearned income and include nonaccrual loans.
    (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 common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by common shares outstanding at period end. 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 per share data)

      Three Months Ended 
      Sept 30,  June 30,  March 31,  Dec 31,  Sept 30, 
    Tangible Book Value Per Share 2023  2023  2023  2022  2022 
    Shareholders’ equity $558,956  $565,069  $554,958  $532,980  $515,514 
    Less: Intangible assets, net  46,286   46,624   46,979   47,333   47,698 
    Tangible equity $512,670  $518,445  $507,979  $485,647  $467,816 
    Less: other comprehensive loss  (81,653)  (67,997)  (67,445)  (74,211)  (74,983)
    Tangible equity excluding other comprehensive loss $594,323  $586,442  $575,424  $559,858  $542,799 
                    
    Period end shares outstanding  17,816,922   17,887,895   18,014,757   17,813,451   17,920,571 
    Tangible book value per share $28.77  $28.98  $28.20  $27.26  $26.10 
    Tangible book value per share excluding other comprehensive loss $33.36  $32.78  $31.94  $31.43  $30.29 
    Book value per share  31.37   31.59   30.81   29.92   28.77 
                    
    Tangible Equity to Tangible Assets               
    Total assets $6,521,581  $6,479,700  $6,480,018  $6,353,593  $6,087,261 
    Less: Intangible assets, net  46,286   46,624   46,979   47,333   47,698 
    Tangible assets $6,475,295  $6,433,076  $6,433,039  $6,306,260  $6,039,563 
    Less: other comprehensive loss  (81,653)  (67,997)  (67,445)  (74,211)  (74,983)
    Tangible assets excluding other comprehensive loss $6,556,948  $6,501,073  $6,500,484  $6,380,471  $6,114,546 
                    
    Tangible equity to tangible assets  7.92%  8.06%  7.90%  7.70%  7.75%
    Tangible equity to tangible assets excluding other comprehensive loss  9.06%  9.02%  8.85%  8.77%  8.88%
    Equity to assets  8.57%  8.72%  8.56%  8.39%  8.47%

    (Dollars in thousands, except per share data)

      Three Months Ended 
      Sept 30,  June 30,  March 31,  Dec 31,  Sept 30, 
    Return on Average Tangible Equity 2023  2023  2023  2022  2022 
    Net income $8,755  $13,145  $18,355  $20,579  $20,126 
                    
    Average shareholders’ equity $565,153  $557,428  $543,861  $523,406  $529,160 
    Less: Average intangible assets, net  46,468   46,828   47,189   47,531   47,922 
    Average tangible equity $518,685  $510,600  $496,672  $475,875  $481,238 
                    
    Return on average tangible common equity  6.75%  10.30%  14.78%  17.30%  16.73%


      For the Nine Months Ended 
      Sept 30,  Sept 30, 
    Return on Average Tangible Equity 2023  2022 
    Net income $40,255  $53,667 
           
    Average shareholders’ equity $555,559  $531,457 
    Less: Average intangible assets, net  46,825   48,307 
    Average tangible equity  508,734   483,150 
           
    Return on average tangible common equity  10.55%  14.81%

    (Dollars in thousands, except per share data)

      Three Months Ended 
      Sept 30,  June 30,  March 31,  Dec 31,  Sept 30, 
    Efficiency Ratio 2023  2023  2023  2022  2022 
    Net interest income $36,515  $38,921  $43,978  $48,040  $45,525 
    Total other income  19,354   18,575   18,059   16,812   16,383 
    Add:               
    Fair value adjustment for CRA equity security  404   209   (209)  (28)  571 
    Less:               
    Gain on sale of property  —   —   —   (275)  — 
    Income from life insurance proceeds  —   —   —   (25)  — 
    Total recurring revenue  56,273   57,705   61,828   64,524   62,479 
                    
    Operating expenses  37,413   37,692   35,574   33,412   33,560 
    Less:               
    Accelerated Expense for Retirement  —   1,665   300   —   — 
    Branch Closure Expense  —   —   175   —   — 
    Total operating expense  37,413   36,027   35,099   33,412   33,560 
                    
    Efficiency ratio  66.48%  62.43%  56.77%  51.78%  53.71%


      For the Nine Months Ended 
      Sept 30,  Sept 30, 
    Efficiency Ratio 2023  2022 
    Net interest income $119,414  $128,040 
    Total other income  55,988   49,605 
    Add:      
    Fair value adjustment for CRA equity security  404   1,728 
    Less:      
    Loss on securities sale, net  —   6,609 
    Total recurring revenue  175,806   185,982 
           
    Operating expenses  110,679   100,388 
    Less:      
    Swap valuation allowance  —   673 
    Accelerated Expense for Retirement  1,965   — 
    Branch Closure Expense  175   — 
    Severance expense  —   1,476 
    Total operating expense  108,539   98,239 
           
    Efficiency ratio  61.74%  52.82%


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